What the Prime Minister was told about a meeting on Rupert Murdoch’s yacht off the Greek island of Zakynthos is central to the first major challenge to the minority government of Italy’s Prime Minister Romano Prodi. At issue is whether Prodi was aware of a proposal by the privatised national telco Telecom Italia to split its mobile and fixed-line businesses with Murdoch’s News Corp, the potential buyer of part of the mobiles.

The Associated Press reports Mr Prodi telling the Italian Senate that in talks with then-Telecom Italia Chairman Marco Tronchetti Provera, he was only told of a possible partnership with Rupert Murdoch’s News Corp, and not of a plan to separate the company’s fixed-line and mobile phone businesses. “I was never informed of any plan on Telecom Italia,” the premier said, reiterating statements he made in a speech to the lower house of parliament last week.

Once told of the possible Murdoch deal “the government limited itself to expressing hope that control of the country’s most important telecommunications company would remain in Italian hands,” he said.

Mr Tronchetti Provera, forced to step down as the Telecom chairman after plans to divide the company were announced earlier this month, gives a different version of events. He told the London Financial Times that there was “no doubt” that Prodi had been told that a sale of Telecom Italia mobile assets was possible.

On Sept. 11, Telecom Italia announced a reorganization plan which reversed the company’s previous strategy of convergence and revealed plans to split its fixed-line and mobile businesses in two. At that time Tronchetti Provera stopped short of saying the company was considering selling mobile unit TIM, but the strategy shift prompted a furious response from the center-left administration, with Prodi joining critics opposing the move as a precursor to the sale of mobile assets.

The meeting on the yacht in the Mediterranean involved Messrs Murdoch and Tronchetta Provera and, according to a Reuters report, Telecom Italia’s chief executive officers, Carlo Buora and Riccardo Ruggiero.

The report said a deal between Murdoch’s Sky Italia and Telecom Italia – whether on content alone or a deeper collaboration – could be strong competition for Mediaset, which along with digital interests controls three terrestrial channels that compete with state broadcaster RAI. Mediaset is owned by the former Prime Minister Silvio Berlusconi.

Peter Fray

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