Europe's biggest merger came under threat last night after it emerged that the Italian government, whose approval is critical for the merger to go ahead, still had serious objections to Deutsche Telekom combining with Telecom Italia. Europe's largest and fourth-largest operator respectively yesterday chose the neutral territory of London to announce a "merger of equals" to create a group with a market capitalisation of $172.8 billion (€162.97 billion), and to create a European entity able to compete in world markets.
The Italian government was last night pressing Bonn for a bilateral meeting amid signs that senior ministers in Rome had objections to the deal. Italian ministers said they could not back the plan unless the German government made a precise commitment to start selling its 72 per cent stake in Deutsche Telekom.
"We would like to see a clearer commitment on this," said a senior Italian Treasury official. "It is a point on which both [Treasury Minister, Mr Carlo Azeglio] Ciampi and Mr Massimo D'Alema [the Italian Prime Minister] are completely agreed."
France Telecom issued a statement describing the Italo-German telecoms tie-up as an "explicit violation" of its agreements with the German operator, raising the prospect of legal action. German Finance Minister Mr Hans Eichel confirmed he had spoken with Mr Ciampi but indicated Bonn was unwilling to revise the basic principles it set out this week in a letter sent to the Rome Treasury. These were that the German government would sell its shares in Deutsche Telekom at its own tempo and according to financial market conditions, but that Bonn would not seek to influence the business strategy of the new group.
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