Hamburg  - Telecom Italia has sharply cut back its plans for a high-speed data network in Germany's second-biggest city, Hamburg, according to news reports Friday.

The telco's German subsidiary Hansenet would limit the optical fibre network to a single city district as a "pilot" project, the Hamburger Abendblatt said. Hansenet had decided to concentrate on more important issues.

Speaking to Deutsche Presse-Agentur dpa, Hansenet spokesman Carsten Nillies confirmed a delay of two to three months in construction and a reduction in the investment from 50 million to just 10 million euros (16 million dollars).

A German business monthly, Capital, said the unit had lost large numbers of customers amid fierce competition to provide combined high-speed ADSL and telephone connections to German homes and offices.

Nillies denied major losses, including Capital's report that half of all Hansenet customers had reported difficulties making phone connections.

Capital reported Hansenet currently had 2.3 million customers, but had lost 500,000 in the space of one year amid complaints at its customer service and cheaper offers by rivals.

Nillies said the figures did not make sense, but said Telecom Italia would not issue the actual German figures till May 9.

Capital said Telecom Italia had been forced into economies by a risk that it would have to pay 3.5 billion euros in back taxes. (dpa)