* New CEO aims to strengthen balance sheet

* Investment plan to upgrade networks in Italy, Brazil

* Launches convertible bond worth up to 1.3 bln euros

* CEO does not rule out Brazil sale but says is "core asset"

* Biggest shareholder Telefonica backs the moves

* No comment on dividend plans

By Danilo Masoni and Leila Abboud

MILAN/PARIS, Nov 7 (Reuters) - Telecom Italia will sell its Argentina unit and other assets while issuing a convertible bond, aiming to raise around 4 billion euros ($5.3 billion) to stave off a credit rating downgrade and strengthen operations in Italy and Brazil.

Italy's biggest telecoms operator, which is in the middle of a strategy shift under new Chief Executive Marco Patuano, said it had received an unsolicited offer for its 22.7 percent stake in Telecom Argentina and planned to sell.

Argentine newspapers Clarin and La Nacion said late on Thursday that the buyer would be investment fund Fintech, which already holds shares in Telecom Italia's Argentine unit. Fintech could not be reached for comment after office hours.

Telecom Italia also plans to sell and lease back more than 17,000 mobile towers it owns in Italy and Brazil, and unload an Italian digital broadcasting unit, aiming to reap more than 2 billion euros from these deals.

The moves represent a major change for the debt-laden former Italian telecom monopoly and show the influence that its largest shareholder, Spain's Telefonica, is having after it agreed to raise its ownership of the holding company that owns 22.4 percent of Telecom Italia.

Patuano's new strategy, which has been backed by Telefonica, aims to chart a course out of Telecom Italia's high debts and deteriorating business in its home market by ploughing money into upgrading its creaky Italian network.

The asset sales could help stave off further credit downgrades. Moody's already cut Telecom Italia's rating to junk last month, while Fitch and Standard and Poors have it one notch above. Further downgrades will be costly because the company has to roll over large amounts of debt next year.

Moody's credit analyst Carlos Winzer said the agency would not count the convertible bond as equity until it converts to shares in 2016, so it would not help its rating for now.

"From our perspective as a rating agency, this is an immediately neutral move, and will be credit positive and strengthen the balance sheet only in year three when the bonds convert to equity."

EMPHASIS ON BRAZIL

The plan also puts a renewed emphasis on the group's Brazilian business, which sources have told Reuters that Telefonica is aiming to sell from the second half of 2014 onwards. TIM Brazil is the second-biggest mobile operator behind Telefonica's own Brazilian unit in the growing emerging market.