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UPDATE 1-Italy govt says Telefonica's Telco stake a problem

Published 09/29/2009, 08:42 AM
Updated 09/29/2009, 08:45 AM
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* Telefonica's stake a "significant problem"

* Speculation grows Telefonica may leave Telco group

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ROME, Sept 29 (Reuters) - An Italian official criticised Spanish company Telefonica's large stake in the group controlling Telecom Italia as a "significant problem", showing Italy's growing unease with foreign influence over the company.

The comments by Deputy Communications Minister Paolo Romani come as speculation heats up over whether Telefonica will exit the Telco investor group controlling Telecom Italia, as an October deadline to declare plans to leave the pact nears.

The remarks are also the latest indication of the Italian administration's opposition to any potential merger between the two telecom giants, speculation over which has helped push up Telecom Italia shares in recent months.

"This very important infrastructure (Telecom Italia's network) must remain Italian," Romani told a parliamentary commission on Tuesday.

"Telefonica's 40 percent stake in Telco is a significant problem that must be resolved. It's up to the company, but the government is watching carefully."

La Repubblica newspaper on Tuesday said Romani had travelled to China earlier this month to find investors to substitute Telefonica in Telco, which owns 24.5 percent of the top Italian telecom operator.

With a 42.3 percent stake in Telco, Telefonica is the largest shareholder in Telco, followed by Italian corporate stalwarts Generali, Mediobanca, Intesa Sanpaoloand the Benetton family's Sintonia vehicle. (Reporting by Alberto Sisto; Writing by Deepa Babington, editing by Will Waterman)

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