Italy Eyes Law To Strengthen Regulator's Powers On Tel.Italia

MILAN -(Dow Jones)- Italy's Communications Minister Paolo Gentiloni said the government is planning to introduce a law in an attempt to give more powers to the Italian telecoms regulator, which would allow it to push for Telecom Italia's fixed network to be put into a separate unit.

Gentiloni added the government doesn't plan to intervene in the talks Pirelli is holding on selling its indirect stake in Telecom Italia, but that it's part of the government's duties to ensure that Telecom Italia network doesn't fall into foreign hands.

U.S. giant AT&T and its Mexican partner America Movil are in talks with Pirelli to each buy one third of Olimpia SpA, the unlisted holding controlled by Pirelli that in turn holds 18% of Telecom Italia.

There has been increasing pressure from the centre-left government of Prime Minister Romano Prodi for Italian banks to find a solution to keep Italian control - at least of the fixed-line network, which is viewed as a strategic asset.

Italian main financial institutions, including Intesa Sanpaolo, Mediobanca and other financial heavyweights could team-up and seek control of the former monopoly.

On the network separation, Gentiloni said the new law would give Italy's communication authority AGCOM greater scope to regulate the fixed network.

AGCOM is already examining a Telecom Italia plan to separate the fixed network for regulatory purposes, aiming at giving alternative operators access to the local loop.

Gentiloni said his law would give the authority additional powers to impose changes in fixed network regulation, which currently Telecom Italia can reject.

"We are thinking of introducing a norm which gives the communications authority more powers to regulate the network," he said, as confirmed by a spokesman.

America Movil moved Tuesday to smooth Rome's concerns over joint talks to buy control of Italy's biggest telecoms operator, saying it doesn't want to break up Telecom Italia and would keep the company Italian.

The Mexican operator and U.S. phone giant AT&T announced talks on April 1 with Pirelli to buy a majority stake in Olimpia. The talks are exclusive until April 30.

-By Giada Zampano, Dow Jones Newswires; +39 02 5821 9907; giada.zampano@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 10th April 2007