LONDON Telecom Italia (TLIT.MI) is said to be pursuing an alliance with Vivendi (VIV.PA) that may see the French media group take a "significant" stake in the Italian company, Bloomberg said on Thursday, citing people with knowledge of the matter.
A deal could involve Vivendi receiving equity in exchange for Vivendi's Brazilian cable company GVT, the report said. Telecom Italia could also offer cash or raise shares to fund the deal, it said.
Vivendi and Telecom Italia declined to comment. The Italian company said on Wednesday it was considering all its options in Brazil, where it is 67 percent owner of mobile operator TIM Participacoes (TIMP3.SA), rival to its own shareholder Telefonica's (TEF.MC) Vivo (VIVT3.SA).
Telefonica made a surprise 6.7 billion-euro bid for GVT on Tuesday.
The Bloomberg report said talks had taken place between Telecom Italia's chief executive Marco Patuano and Vivendi's chairman Vincent Bollore before the Telefonica bid for GVT, citing people with knowledge of the matter.
Telecom Italia's stock was up 1.9 percent at 0.82 euros (1.0949 US dollar) at 1454 GMT (10.54 a.m. EDT), having traded as low as 0.798 euros before the report came out. Vivendi's shares initially rose on the back of the report before falling back to trade 0.8 percent lower.
(Reporting By Francesco Canepa and Lionel Laurent in London, Maya Nikolaeva in Paris and Paola Arosio in Milan; Editing by Greg Mahlich)