Opposition chief and former premier Silvio Berlusconi said on Friday that his family holding company Fininvest would abandon all thought of Telecom Italia (TI) if his political opponents made a conflict-of-interest issue out of it.
Speaking five days after American telecoms giant AT&T quit talks for a key stake in TI, Berlusconi - Italy's richest man - said that "if they raise talk of conflicts of interest or do things which are politically unacceptable, then Fininvest will have no problem in pulling back".
Berlusconi said that banking representatives were sounding out his groups on their interest in TI.
"Representatives of the banking world have asked Fininvest and Mediaset (Berlusconi's three-channel private TV network) if they would be willing to join a potential consortium of Italian businessmen," he said.
"If we're needed, all well and good, and if not, then that's ok too. We don't want to hinder anyone else," he said.
Pirelli currently controls 18% of TI, which has a market capitalisation of around 44 billion euros, through holding company Olimpia.
The tyre group is hoping to sell some or all of its 80% stake in Olimpia and is in talks at the moment with Mexico's America Movil.
Spanish phone operator Telefonica is also reported to be mulling a 4.8-billion-euro bid for 66% of Olimpia.
The foreign interest has alarmed many members of Premier Romano Prodi's centre-left government, who regard TI as a strategic national asset and want it to remain Italian.
TI was privatised in 1997 but the government still holds veto powers over the ex-monopoly's corporate decisions.
The premier himself said this week that he hoped TI would remain Italian but has firmly denied interference over the AT&T offer.
The Italian media has been rife with speculation that 70-year-old centre-right chief Berlusconi will move on TI, possibly with the help of Piaggio motorbike and scooter-maker chief Roberto Colaninno.
Some political analysts said elements in the government would prefer to have Berlusconi step in rather than see TI falling into foreign hands.
Mediaset Chairman Fedele Confalonieri, said on Wednesday that: "It's obvious there's interest. It's an operation that makes sense". But he ruled out any intention to take control of debt-laden TI, saying "certain things can't be done".
Mediaset Deputy Chairman and Berlusconi's son Pier Silvio Berlusconi subsequently stressed that his company was "not in any direct talks" as yet.
WORRIED REACTIONS.
But the possibility of Fininvest or Mediaset buying into TI sparked a flurry of worried reactions from centre-left lawmakers, who said such a deal would add to Berlusconi's conflicts of interest and break current media laws.
The Italy of Values party led by former anti-graft prosecutor Antonio Di Pietro said: "The integration of media and telecoms interests of such gigantic proportions would generate the biggest conflict of interests in the history of democracy".
Communist Refoundation Party chief Franco Giordano, whose party is one of nine in the governing coalition, said conflict-of-interest legislation had to be toughened up before it could approve of Berlusconi buying into TI.
Under the current law, approved during the previous, Berlusconi-led government, government officials are barred from holding management or operative roles in major private companies but not from owning them.
The centre left wanted much more stringent rules, with a system which would make ownership of companies automatically incompatible with government and oblige politicians such as Berlusconi to sell their firms or put them in a blind trust.
However, not all government members remained hostile to the idea of a Berlusconi-TI operation.
Justice Minister Clemente Mastella said earlier this week that a Fininvest move "would not be inappropriate".
Meanwhile, investment banking firm Goldman Sachs said that current media laws would have to be changed before Mediaset or Fininvest could buy into TI.
It noted that TI also owns two TV channels, La7 and MTV Italia, and said that Mediaset's purchase of TI would therefore represent a breach of the law's antitrust norms.
