As The Wheel Turns

Communications Today, April 26, 1999

In the continuing saga of Telecom Italia [TI], the European Commission (EC) Friday raised no objections to Olivetti's proposed acquisition of Italy's incumbent telco and gave DeTeMobil, a wholly owned subsidiary of Germany's Deutsche Telekom [DT], the go-ahead to proceed with its planned acquisition of Austrian cellular operator max.mobil.

With three mobile carriers already operating in, and a fourth making final preparations to enter the Austrian market, competition won't be impaired by further consolidation of GSM-900 operator max.mobil's ownership, the EC said. Olivetti's tender offer for TI, if successful, would have Olivetti selling all its other telecommunications interests -- including an interest in cellular operator Omnitel Pronto Italia -- to eliminate anti-competitive overlaps, the EC said. Germany's Mannesmann [MNNSY], Olivetti's principal partner in Omnitel and fixed-line joint venture Infostrada, has agreed to a binding contract to acquire these interests from Olivetti if the TI tender offer succeeds. But those carefully laid plans were fractured last week when TI's top management blessed a higher offer from DT (CT, 4/20). The Italian government, meanwhile, raised the prospect Friday that it would block the TI-DT merger if the German government retains majority ownership of DT. "It is not reasonably acceptable or conceivable that Telecom Italia is bought by a German state company," Italy's Finance Minister Vincenzo Visco said. The German government has promised to at least reduce its stake.