Italy opposed to any T.Italia-Telefonica deal

Tue Feb 2, 2010 6:57am EST

* Report says govt gave blessing to telecoms merger

* Govt denies; Telecom Italia, Telefonica have no comment

* Telecom Italia shrs suspended after touching 15-wk high

(Recasts with government denial, adds details)

ROME, Feb 2 (Reuters) - Italy's government on Tuesday denied a report that it had given its blessing to a Telefonica (TEF.MC) takeover of Telecom Italia (TLIT.MI), which had sent shares of the Italian telecom operator nearly 9 percent higher.

Telecom Italia shares were suspended for excessive gains after shooting up to 1.175 euros to touch a 15-week high. They were up 5 percent when trading resumed shortly afterward.

In an unsourced report, Italian daily la Repubblica had said the government was ready to give its go-ahead to an all-share offer from Spain's Telefonica on condition that the fixed-line network remains in Italian hands and that Italian shareholders be involved in the governance of the combined entity.

Prime Minister Silvio Berlusconi's office said in a statement that it "completely denied" any meetings, contacts or conditions for a deal as mentioned in the article.

Political resistance from the Italian government had been seen as the biggest obstacle to a potential deal between the two companies, which have long been speculated as likely merger partners. Rome has been wary of allowing a strategic national asset such as the phone network fall into foreign hands.

The newspaper said that Telefonica planned to present an offer soon. Telecom Italia and Telefonica declined to comment.

(Reporting by Rome and Milan bureaux, writing by Deepa Babington)

((deepa.babington@reuters.com; + 39 06 8522 4369; Reuters Messaging: deepa.babington.reuters.com@reuters.net)) Keywords: TELECOMITALIA/

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