31/03/2010 By Simon Thiel, Jim Silver ( Source: http://www.businessweek.com )

Telefonica, Telecom Italia Deal Is Unlikely, Credit Suisse Says

Telefonica SA, Europe’s second- largest telephone company, will probably not bid for Telecom Italia SpA, Credit Suisse Group AG said.

“We see a Telefonica bid for Telecom Italia as both unlikely and a relatively high-risk move for limited returns as far as Telefonica shareholders are concerned,” David George, a London-based analyst at Credit Suisse, wrote today in a report.

Madrid-based Telefonica is the largest shareholder of Telco SpA, a holding company that controls Telecom Italia with a 22.4 percent stake. The Spanish company first invested in Telecom Italia in 2007 and since then speculation about a merger has been recurrent.

Telefonica is focused on generating synergies through its industrial alliance with Telecom Italia and is comfortable with its current 46 percent stake in Telco, Chairman Cesar Alierta said last month.