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Telecom Italia: No Murdoch Plans

European carrier giant Telecom Italia (TIM) has denied it is planning to sell any assets or engage in an equity swap with News Corp. (NYSE: NWS)'s Italian operation, Sky Italia.

The operator was forced to issue a statement after persistent local media reports that the two parties have been discussing a potential equity swap and that Telecom Italia might hand ownership of its fixed-line business to the government-owned financial company CDP to allow such an equity deal to take place.

Telecom Italia, concerned that the speculation could affect its share price, acknowledged "the rumours which have appeared in the daily press about hypothetical agreements with the News Corporation editorial group," but said that talks were "for the supply of media content" only and that "similar discussions are also underway with other media content providers."

The talks are believed to center around the distribution of Sky Italia programming to the carrier's broadband customers in France and Germany as well as Italy.

Telecom Italia added: "There are no understandings between the two groups, let alone agreements, nor any reference to a possible share swap."

News Corp. boss Rupert Murdoch also played down the rumors yesterday during his company's latest earnings report, saying that talks were only about TV content and that "there's nothing serious going on there."

Telecom Italia, which launched its IPTV service last December, already has a content arrangement with Sky Italia. The national operator is playing IPTV catchup with one of its main broadband rivals, Fastweb SpA (Milan: FWB), which launched its TV-over-broadband service years ago with content from Sky Italia. (See FastWeb Offers IPTV Lessons, TI Adds to IPTV Content, and TI Unveils IPTV Lineup.)

Telecom Italia's stock is down slightly today at €2.10, down about 20 percent since the start of 2006. The carrier recently reported its first-half results. (See Telecom Italia Reports H1.)

— Ray Le Maistre, International News Editor, Light Reading

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