MILAN, March 6 (Reuters) - Telecom Italia (TIM)

expects its core earnings to grow at 8% on a compound

annual basis over the next three years under a new leaner

structure after a planned sale of its domestic fixed-line

network, it said on Wednesday.

Worth up to 22 billion euros ($24 billion) and backed by the

Italian government, the network deal is designed to slash the

company's debt pile and cut costs.

"The sale of the fixed network will allow TIM to move into

the market with fewer financial and regulatory constraints," TIM

said in a statement after a board meeting approved a new three-

year business plan set out by Chief Executive Pietro Labriola.

The former phone monopoly targets a compound annual growth

rate (CAGR) of 3% for revenue in the period to 2026 for the

streamlined company under a programme it has named "Free To

Run".

It reported revenue of 14.4 billion euros on a proforma

basis for the new structure last year, while earnings before

interest, tax, depreciation and amortisation (EBITDA) including

lease costs stood at 3.5 billion euros on the same basis.

For its domestic business, under pressure for years due to

stiff price competition, TIM forecast a growth of core earnings

at an annual rate of 9-10% over the period on a compound basis,

from 1.9 billion euros last year.

Under the model sought by Labriola, the domestic consumer

business would stabilise its revenue base by building up

partnerships to sell its customers a wide range of services

beyond connectivity, while the enterprise arm would continue its

growth helped by an expanding cloud market.

The company said it expect to generate positive free cash

flow both in Italy and from its Brazil-listed unit in the period

to 2026.

TIM, which expects to finalise the network sale to U.S. fund

KKR in the middle of the year, forecast its debt after

lease to fall to 1.6-1.7 times its core earnings in 2026, from

3.8 times last year under the current structure.

The outgoing board, whose mandate expires in April, has also

drawn up a list of candidates for investors to vote on at

shareholder meeting.

The slate includes Labriola's name to retain the role of CEO

and business lawyer Alberta Figari as chair, replacing Salvatore

Rossi.

($1 = 0.9178 euros)