Telecom Italia Chairman Calls Talk of Merger With Orange "Fantasy"--Update

(Adds context, Recchi comments)

By Manuela Mesco

MILAN--Telecom Italia SpA's (TI) Chairman Giuseppe Recchi Friday said that a merger with France's Orange SA (ORA.FR) was "pure fantasy," following comments from the French firm's chief executive referring to a possible operation involving the Italian telecom operator.

Earlier this week, Orange Chief Executive Stephane Richard said he may look at an operation involving the Italian company if asked to do so by Telecom Italia's largest shareholder, French media company Vivendi SA (VIV.FR). He added that he thought such an invitation was unlikely.

Following Mr. Richard's comments--as well as statements from Italian Prime Minister Matteo Renzi and French President Francois Hollande that they want to create major companies that can compete in Europe--Telecom Italia's stock price rose as much as 4% on Wednesday to then close up 1.6%.

Speaking on the sidelines of an event in Milan, Mr. Recchi accused the Orange CEO of repeatedly making statements about an operation "that is only in his mind" and "hasn't found any validation within our board."

He stressed that responsibility should be taken for repeatedly referring to operations that don't exist as these statements can affect share prices.

"I'm tired of seeing our company constantly involved in [speculation about] a possible operation that today is not even [being considered]," Mr. Recchi said. "It's pure fantasy."

Last year, speculation about a deal rose after Mr. Richard publicly expressed interest in Telecom Italia. Orange's CEO later played down the comments, saying he believed a deal with Telecom Italia could be attractive but he had no plans to pursue it.

A spokesman for Orange said there was no project to do a deal with Telecom Italia following Mr. Richard's comments earlier this week.

Mr. Recchi also said cross-border consolidation doesn't necessarily create value, while national consolidation makes more sense from an industrial standpoint.

"The only synergies [in cross-border consolidation] are financial and not industrial," Mr. Recchi said.

Friday, Telecom Italia's share price rose over 4%, part of a wider rally from highly indebted companies following the ECB's decision Thursday to lower interest rates.

Write to Manuela Mesco at [e-mail]

(END) Dow Jones Newswires

March 11, 2016 08:22 ET (13:22 GMT)

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