Europe's biggest circle Telecom Italia

Two of Europe’s biggest telecoms firms are understood to be circling Telecom Italia (TI) in a bid to counteroffer AT&T/America Movile’s £2bn play for the Italian incumbent.

France Telecom and Spanish operator, Telefonica, have contacted Italian banks and insurers in an attempt to create a consortium that is acceptable to the Italian government, according to the Wall Street Journal.

Earlier this week, ministers made it clear that foreign investors would be challenged in order to keep TI in Italian ownership.

France Telecom and Telefonica refused to comment.