Telecom Italia faces pressure over debts, shares fall-report

Telecom Italia's shares fell to a new low of €0.86 Tuesday, close to the €0.85 level at which its controlling shareholder group Telco would reportedly be forced to put its 25% stake up as collateral on Telco's debt, a Dow Jones report said.

According to a report in daily newspaper MF, an accord with Telco's creditor banks states that 17% of Telecom Italia's shares are held as collateral on Telco's debt.

Should the shares fall to €0.85, that agreement would extend also to the 25% stake held by Telco, MF reports.

Telecom Italia shares, which recently have been hard hit by debt worries and possible delays in the entry of a new strategic shareholder, closed down 2.4% at €0.93, after touching new 10-year lows at €0.86 earlier Tuesday.

Traders said worries over the former monopoly's €37 billion debt were continuing to weigh Tuesday, amid continuing market turmoil.

The stock's slide brings into question the Italian group's recapitalization plans, which could involve investment from sovereign funds in Libya, Russia, Qatar and the United Arab Emirates. Such an operation could generate fresh resources of around EUR3 billion.

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