Earlier this month, the US mobile giant said it had entered negotiations with Italian tire company Pirelli, which controls 80% of the holding company Olimpia. The Benetton family holds the other 20% of Olimpia.
AT&T, along with America Movil, the largest mobile operator in Latin America controlled by Mexican billionaire Carlos Slim Helu, said they were talking with Pirelli to acquire a third each of its 80% Olimpia stake. Olimpia is a strategically important company in the complex holding structure of Telecom Italia because it has an 18% stake and appoints the majority of its board.
AT&T said Tuesday that it appreciated the opportunity to explore a possible investment in Olimpia and a strategic partnership with Telecom Italia, but has decided not to pursue the matter further.
Speaking to Computer Business Review, an AT&T spokesperson refused to disclose the reasoning behind the withdrawal, but it is known that there has been strong opposition in Italy, mostly from trade unions, to Telecom Italia potentially falling into foreign hands.
America Movil has not yet withdrawn from the talks. It is reportedly considering its options as to whether to proceed on its own, find partners, or walk away.
Our View
It is clear that there has been a great deal of hostile response in Italy to the prospect of Telecom Italia falling into foreign ownership. This has been led mostly by the trade unions, but even the Italian government has made no secret of its opposition to the deal.
During a press conference in Japan, Italian Prime Minister Romano Prodi said he hoped TI would remain Italian. He also suggested that some European players could be interested in the stake. Certainly Telefonica is known to have considered a deal at one stage, but now there is talk that possibly France Telecom will consider a move.
The continued intervention by the Italian government amply demonstrates the intensely protectionist nature of some European governments to their incumbents. Until such attitudes change, it is difficult to see foreign ownership of supposed national champions ever being accepted.
