Ministers vow to keep TI Italian

Italy’s desire to keep its largest telecoms group from slipping into foreign control saw ministers and government leaders pledging to block a Eur 4.5bn (£3.04bn) bid from two North American companies Monday.

No sooner had AT&T and America Movil stepped up to buy Telecom Italia (TI) when communications minister Paolo Gentiloni said Italy had to find the “resources to react” and prevent TI “from falling out of our system”.

Gentiloni said he was also speaking for Italian Prime Minister Romano Prodi’s office declaring that he “was very worried” about the American companies’ interest in buying TI. The rhetoric maintained defiant throughout the day when other members of Mr Prodi’s administration insisted that TI had to be kept out of foreign hands.

Pierluigi Bersani, economic development minister, described the North American bid as “disturbing”. Infrastructure minister, Antonio Di Pietro joined the chorus saying the Italian government would prevent “financial shopping for fundamental assets”.

Di Pietro’s stance could prove be the kiss of death for the bid: he was instrumental in blocking an attempt by Spanish firm Abertis, to buy Autostrade, Italy’s largest toll road operator.

The ministers’ defensive mood is explained by Italy’s current telecoms market which is dominated by foreign investors. Three of the country’s other telcos are owned by foreign companies while FastWeb, Italy’s second largest fixed-line firm is being bought by Swisscom.

Stefano Nicoletti, principal analyst at Ovum said there is concern in Italy over the future of TI mainly because Italians “fail to see the benefits of privatisation… there is not enough fluidity in the markets. There should be privatisation with appropriate liberalisation of the markets but this has not happened in Italy.” Nicoletti believes an earlier bid for TI from a group of Italian banks is “the best solution and most likely”.