Italy's largest private company Fiat SpA on Tuesday announced a telecommunications alliance and the sale of its railway equipment unit, following through on a strategy to adjust its vast portfolio, which remains heavily weighted toward automobiles.

In the telecom deal, Fiat will invest $383 million over three years through its subsidiary Telexis to partner with the Acea-Telefonica group in creating Atlanet, a fixed-line, data network and Internet service. Fiat will have a 28 percent interest in the venture and said the partnership might eventually pursue mobile phone services.

The Agnelli family will have a 5 percent stake in Atlanet. Telefonica Data, the holding company for Internet and voice services in the Spanish Telefonica group, will have 34 percent and Acea will own 33 percent.

Atlanet, whose service begins Wednesday, expects $791 million in sales over the next three years.

Also on Tuesday, the group announced the sale of 51 percent of its rail subsidiary, Fiat Ferroviaria, to Franco-British transport and energy engineering group Alstom.

The transaction values the whole of Fiat Ferroviaria's business at about $344 million. Fiat Ferroviaria generated $359 million in net revenue in 1999 and employs about 2,300 people in Italy, Switzerland and the UK.

Under the deal, Fiat would be allowed to sell the rest of the unit to Alstom over two years.

At a shareholders meeting earlier this month, Fiat chairman Paolo Fresco said the company was planning to diversify its businesses and seek new partnerships. Fiat employs 221,000 people and had net revenues of $46 billion in 1999.