Telefónica opposes Tel Italia investor plan

Telefónica, one of Telecom Italia's largest shareholders, has said it is not in favour of the Italian incumbent adding a new shareholder through capital increase. It is also opposing a cut in dividend.

The comments, made by Santiago Fernandez Valbuena, Telefónica's finance director, are likely to fan the flames of political controversy in Rome over the Spanish operator's investment in Telecom Italia, the Financial Times says.

Telefónica insists it not interested in full ownership of Telecom Italia, but this has not stopped Italian politicians, including controversial Prime Minister Silvio Berlusconi from warning against this national asset falling into foreign hands. However, he seems willing to accept money from overseas to shore up the ailing operator, if not management input.

In September, the Libyan Investment Authority, a sovereign wealth fund, was said to be interested in buying a stake of up to 10% in Telecom Italia.

Last year Telefónica paid €2.3 billion to become the largest shareholder in a company that in turn has a controlling stake in Telecom Italia. Telefónica gained a 10% economic interest in Telecom Italia,, paying the equivalent of €2.82 per ordinary share.

The FT reports that Telecom Italia's ordinary shares have fallen almost 60% this year, and closed down 4% at €1 on Thursday.