* Telecom Italia seeks to raise 4 bln euros via asset, bond sales
* Company aims to fix balance sheet, avoid downgrade
* Fitch says steps not enough to significantly reduce debt
* Investors stitching to bond -traders
* Shares down nearly 6 pct
(Recasts with details of Telecom Argentina offer, Fitch)
MILAN, Nov 8 (Reuters) - Telecom Italia said on Friday it had received an offer worth $1 billion for a stake in its Argentinian unit, whose sale is the cornerstone of a new strategy aimed at raising 4 billion euros to avoid a credit downgrade and revive its business.
Telecom Italia Chief Executive Marco Patuano, who has recently taken over from Franco Bernabe, unveiled late on Thursday a set of disposals that includes the sale of 22.7 percent of Telecom Argentina.
A further step was the issuance of a convertible bond for 1.3 billion euros ($1.74 billion). The company is also planning to reap around 2 billion euros through the sale and lease back of more than 17,000 towers in Italy and Brazil as well as the disposal of Telecom Italia's digital broadcasting business.
The plan does not envisages the sale of Telecom Italia's main Latin American asset, a majority stake in Brazilian mobile phone operator TIM Participacoes, which has been at the centre of speculation over asset sales in past months.
Speaking at a press conference on the plan details, Patuano said the offer for Telecom Argentina was "worth around $1 billion". He declined to say who the bidder was, but Argentinian media have said the offer came from investment fund Fintech, which could not be reached for comment.
The plan has the backing of Spanish rival Telefonica , which is also Telecom Italia's largest shareholder.
Telefonica agreed in September to gradually take over the Italian group after striking a deal with Italian investors Mediobanca, Generali and Intesa Sanpaolo , with which it shares control of Telecom Italia.
Patuano said the measures would help the heavily indebted Telecom Italia to support investments in recession-hit Italy and in the growing Brazilian market while strengthening its balance sheet.
But credit rating agency Fitch said Telecom Italia must address earnings erosion at home to avoid being downgraded to 'junk' as planned asset sales and a mandatory convertible bond unveiled on Thursday are unlikely to help cut debt, Fitch said.
"The group's third-quarter results show that its domestic operations remain under significant pressure," Fitch said on Friday. "The company's ability to maintain its investment-grade rating therefore continues to depend on significantly slowing the rate of decline in EBITDA (core earnings) in 2014."
Telecom Italia's nine-month core profit was down 10.5 percent to 7.93 billion euros.
Fitch rates Telecom Italia's long-term rating at "BBB-", just one notch above non investment grade.
Telecom Italia was able to raise its full targeted amount of 1.3 billion euros through the 6.75-pct mandatory convertible bond, which will be redeemed in ordinary shares in 2016.
But Fitch, which sees considerable execution risks for the plan, said the bond would not qualify for equity credit and would not help Italy's biggest operator to cut its debt of nearly 29 billion debt.
Shares in Telecom Italia dived 5.8 percent on Friday in the aftermath of the plan announcement.
Investors sold Telecom Italia shares to rebalance portfolios after buying into the convertible bond, traders said.
Analysts said Telecom Italia was forced to take some drastic new measures to try and address underperformance after having been hit hard by a long recession and a price war in Italy. For more than a year Telecom Italia had hesitated on which way to go further, twice rebuffing approaches from non-European investors.
"The company has a revolver pointing at its head. They have to do it," a Milan-based fund manager said. "It's a step in the right direction."
In the last three months, Telecom Italia's stock has risen 46 percent on speculation there would be asset sales.
Patuano told analysts on Thursday he considered lucrative Brazilian unit TIM Participacoes a core asset. But he added that the unit may be sold at a "convincing price".
A source familiar with the matter has said Telecom Italia wants at least 9 billion euros for its stake in TIM.
One analyst said expectations that it could sell its Brazilian asset had been so high, that the news it was not to be offered for now had caused some disappointment. ($1 = 0.7472 euros)
(Additional reporting by Stephen Jewkes, Valentina Za and Stefano Rebaudo; Writing by Lisa Jucca and Alastair Macdonald; Editing by Giles Elgood)