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Italian phone giant fined in market probe

Telecom Italia receives $135m fine, as anti-trust ruling sets tone for future merger talks.

Last Modified: 10 May 2013 19:10
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Telecom Italia has rung up huge debts, and potential merger talks remain on the line [GALLO/GETTY]

Telecom Italia has been fined $135 million by Italy's anti-trust agency, which alleged that the telecomms giant abused its market position.

The Italian telecommunications company, which employs more than 84,000 people, was reported to have used its dominance in the market to limit wholesale and retail access to its fixed-line network, hampering the phone and broadband business expansion efforts of competitors.

The company's discount policy was also unfair to competition, said regulators on Friday, after a two-year investigation.

Telecom Italia said it would appeal the decision, "confident" that it could "prove the fairness of its practices". Corporate officials said the company had always assured alternative operators "full and equal access to its network".

After Telecom Italia's stock hit a 15-year low of just 54 cents a share last month, executives have been examining the potential of a merger of its mobile phone business with Hutchison's Three Italia network. If the deal were to overcome any regulatory obstacles, the combined carrier would hold around 45 per cent of the country's mobile market.

Shedding jobs

Whether today's ruling against Telecom Italia has any effect on the merger talks remains to be seen.

"Contacts between Telecom Italia and 3 Italia on possible business combinations are still very preliminary and of an exploratory nature," a Hutchison spokesperson said yesterday.

Telecom Italia's $37.4bn net debt is reportedly a cause for concern for the company, a person familiar with the matter told Bloomberg.

The former monopoly is reportedly shedding jobs and assets in a bid to generate cash ahead of a special board meeting scheduled for May 23, after first quarter sales dropped to $8.8 billion from $9.5 billion a year previously.

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