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Telecom Italia Shareholders Deny Telefonica Merger Plans

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Telecom Italia's main shareholder group have denied recent media reports that they were considering the realignment which could have lead to a full merger with Spain's Telefonica. The shareholder pact, including Mediobanca, Intesa Sanpaolo and insurance group, Generali issued a joint statement denying an earlier report in La Repubblica.

According to the denied report, Mediobanca had proposed setting up a new holding company that would have combined a 3.75% stake in Telefonica held by Spanish bank La Caixa with the Italian group's own 22.5% stake owned via the holding company, Telco.

There have been persistent rumours that Telefonica would seek a merger with Telecom Italia after the Spanish giant took a minority stake in the company. Telefonica paid EUR2.3 billion for 42.3% of the holding company, Telco in Oct 2007.

Such a move would be politically sensitive as the Italian government has openly stated that it would oppose any transaction that saw the Italian landline network falling under foreign management.

Overlaps in Latin America - especially in Argentina - would add to the difficulties.

On the web: La Repubblica

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