(Refiles to change dateline to June 8)
* Sees early, important signals of telecom spending rebound
* On track to hit Ebitda, cash flow targets
* Domestic mobile results to improve in coming quarters
* Investment in high-speed network to be driven by demand
(Adds details, quotes)
By Deepa Babington and Stefano Rebaudo
ROME, June 8 (Reuters) - Telecom Italia, Europe's No. 5 telecoms operator, is seeing early but important signals of a rebound in Italian telecom spending despite a recession, the head of the company's domestic operations told Reuters.
The signs of improvement -- first seen in April -- stemmed mainly from the public administration sector, but there were also the "first preliminary" signals of a rebound from small- and medium-sized enterprises, Oscar Cicchetti said.
"There are some important, early-stage signals that could lead to some good news in the second half, and some good news for 2010," said Cicchetti, head of the domestic business that accounts for more than three-fourths of overall revenues.
"The crisis environment is giving signals of change."
Shares of Telecom Italia, Italy's biggest telecom operator, turned positive and rose 1 percent after the comments.
Telecom Italia will hit its 2009 cash flow goal and earnings before interest, depreciation and amortization (EBITDA) target of 9.9-10 billion euros for the domestic business, he said, adding the focus was on profitability rather than revenues.
"We are confident to be able to deliver our EBITDA and cash flow targets for 2009," he said. "EBITDA is our priority. It does not mean we are not interested in revenues of course. But we are not interested in protecting revenues at any cost. This would be a wrong strategic approach."
The company's domestic mobile business will post better results in the upcoming quarters, Cicchetti said, after they disappointed analysts with a 7 percent fall in revenues in the first quarter.
But the focus would be on maintaining service market share, since the company did not want to start a price war, he said.
On the highly politicized debate over investment in a high-speed fibre-optic network in Italy, Cicchetti said the company's investments would only be driven by demand -- which remains low at present -- and the willingness to pay for it.
The issue has gained prominence in recent months after some lawmakers proposed splitting off Telecom Italia's fixed-line network to spur Italy's broadband ambitions and a report by a government adviser on various options for that.
Telecom Italia is investing in the high-speed network in cities like Milan where there is demand, which across the country would rise only gradually over the years.
"We are ready to invest in the next generation network when and where our customers are willing to pay for it," he said.
"The issue is that there are not yet killer applications that require ultra-broadband speed and thus customers are not willing to pay a premium price." (Editing by Rupert Winchester)