* Regulator to suspend works on split to at least end-2009
* Likely to drop the TPSA split procedure next year
* TPSA CEO says the move could allow it to raise capex
(Adds quote, TPSA CEO, shares, details)
By Adrian Krajewski
WARSAW, Aug 11 (Reuters) - Poland's telecoms watchdog will likely abandon its plans to split dominant phone operator TPSA after reaching a preliminary deal with the France Telecom unit, its CEO said on Tuesday.
The move signals a reversal by the regulator's chief, Anna Strezynska, who during her three years in office levied hefty fines on TPSA, forced it to cut rates and wanted to divide the company into retail and wholesale units.
"We were able to reach a satisfying level of agreement and at the current stage we can suspend work on the functional separation of TPSA to the end of the year," Strezynska told a news conference.
"If everything goes well, in the autumn we will suspend the procedure for a year. If the situation in 2010 is as good as it is now, by the end of next year we will be able to drop it," she said.
Shares in TPSA, which have been the worst performers among Warsaw-listed bluechips, bucked the negative trend and closed 2.1 percent higher at 16.25 zlotys, earlier reaching their highest level in 2-1/2 months.
The stock also gained from a Reuters report that Poland would hold off from selling its rump stake.
TPSA has maintained there is no need to divide the company and hand over control of the wholesale arm to the regulator because it had taken steps to treat other operators more fairly.
TPSA Chief Executive Maciej Witucki, who previously warned of the negative effects of the regulator's actions on the operator's results, said he welcomes Strezynska's change of heart.
"The closure of disputes, the stabilisation of the market and revived investments are crucial for there to be something to regulate," Witucki said.
He added that TPSA would boost capital expenditures to 18 percent of sales in the coming years, as long as it reaches wholesale agreements with local rivals. (Reporting by Adrian Krajewski, writing by Patryk Wasilewski; Editing by David Cowell)