AT&T backs out of negotiations on Telecom Italia stake

AT&T was pulling out of talks to potentially buy a one-third stake in the Olimpia holding company, which controls Telecom Italia, an Associated Press report said.

The Associated Press report quoted an AT&T statement as saying it had 'decided not to pursue the matter further.

The statement was released as Telecom Italia shareholders met to elect a new board, the report said.

Olimpia started negotiations with AT&T and a Mexican affiliate, America Movil, earlier this month to sell a two-thirds stake in Olimpia, with the option to sell the remaining third after a year, the report said.

The report said in Mexico City, America Movil said that 'after the withdrawal' by AT&T it will continue considering 'different alternatives for a potential investment in Olimpia.'

Pirelli & C SpA, one of Olimpia's owners, said in a statement that AT&T's withdrawal was 'motivated by the possible regulatory difficulties connected with the operation.'

While taking note of America Movil's statement, Pirelli said it was reiterating 'the intention to explore all possible options for the best strategic valuation of the asset in the interest of all the shareholders and to continue, in the meantime, to operate so that Olimpia continues to fully exercise its rights and duties as shareholder of Telecom Italia.'

The negotiations have raised concerns in Rome about a strategic national asset falling into the hands of foreigners, and the media have speculated about arrangements that would allow the company to remain in Italian hands, the report said.