Telecom Italia, Telefonica Talks Not Exclusive - Source"

MILAN (MF-Dow Jones)--Italian telecommunication company Telecom Italia is still in talks with Spain's Telefonica on a possible industrial partnership, a person familiar with the situation said Thursday.

"Talks with Telefonica are not exclusive," the person said, confirming that Telecom Italia is in discussions with "other partners" without further elaborating.

The person confirmed that Telecom Italia's future strategy will be based on assumptions that it is more convenient to explore multiple alliances, by geographic areas and by business, rather than committing to a single partner.

"A non-exclusive partnership with Telefonica rules out the Spanish company acquiring a stake in Telecom Italia's parent company Olimpia," the person said adding that the project for a possible stake acquisition by Telefonica was "on hold".

Telecom Italia confirmed last Friday it had discussed with Telefonica "joint industrial initiatives" - revealing that the Spanish group's parallel talks to buy an indirect stake in the Italian operator did not have a purely financial aim.

Telefonica has been in talks with Telecom's main shareholder Pirelli to buy a minority stake in Olimpia, the holding company that owns 18% of Telecom Italia.

Both Pirelli and Telefonica have said that those talks are on hold, with media reports suggesting that the potential financial benefits of such an alliance would not have been attractive enough for Telefonica.

-By Gabriele La Monica with MF-Dow Jones, Dow Jones Newswires; +39 02 5821 9901; sabrina.cohen@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 8th March 2007