Telecom Italia Gives Cool Response to DT Overtures

ROME (06/08/2000) - A Telecom Italia SpA spokeswoman declined to comment today on reports that Germany's Deutsche Telekom AG wants to form an alliance with the Italian carrier's cellular phone subsidiary.

The reports were prompted by comments made in Milan yesterday by Ron Sommer, chief executive officer of the German carrier, who said the logic behind his attempted merger with Telecom Italia just over a year ago remained valid. The interest was reiterated in remarks, cited in published reports, by T-Mobil International Chairman Kai-Uwe Ricke, who said the two European mobile phone operators made "a perfect fit." T-Mobil GmbH is Deutsche Telekom's cellular carrier.

"Was the logic wrong? No, it was just that a year ago I didn't win," Sommer said of the planned merger, negotiated with Telecom Italia managers who were unsuccessfully striving to ward off the hostile takeover bid of Roberto Colaninno's Olivetti Group.

"If last year's merger had gone through, today TIM (Telecom Italia Mobile SpA) would be the biggest mobile phone company in the world. It would have absorbed our T-Mobil and its management would be entirely in Italian hands," Sommer told reporters.

His overtures were rapidly rebuffed by Roberto Colaninno. "I don't speak German, I speak English," the Telecom Italia chairman and CEO told reporters yesterday. "The fact is we, are both interested in buying." Colaninno has expressed interest in the U.S. cellular phone market in remarks published in recent weeks.

Sommer was in Milan to promote the public offer of a third tranche of Deutsche Telekom shares. His expressions of interest in Telecom Italia and his references to the 400 trillion lire (US$194 billion) that Deutsche Telekom has available for investment could simply be a tactic to drum up investor interest for his company's latest share offering, sources close to Telecom Italia said.

Sommer underlined his interest in the Italian mobile telephony market by confirming to journalists that Deutsche Telekom intends to bid for a UMTS (Universal Mobile Telecommunications System) license in Italy in the forthcoming competition.

Deutsche Telekom's bid will be separate from that of Wind SpA, its joint telecom venture with the Italian electricity utility ENEL SpA and France Telecom SA, Sommer told reporters. Deutsche Telekom is currently negotiating its disengagement from Wind following the irritation caused to its partners by its attempted merger with Telecom Italia last year.

Telecom Italia can be contacted in Rome at +3906-3688-2066 or on the World Wide Web at http://www.telecomitalia.it.

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