The Italian communications minister said on Tuesday that the government is closely monitoring talks between Telecom Italia and the New York-listed media giant News Corp, following reports that the Italian company was negotiating to buy News Corp's Sky Italia.
Italian media have speculated that News Corp could be interested in swapping its stake in Sky Italia for a share in Telecom Italia or Olimpia SpA, which controls Telecom Italia.
"The government is following the matter closely," Communications Minister Paolo Gentiloni said.
"What is certain is that the infrastructure grid is an asset which the country cannot give up," he said.
Telecom Italia issued a statement late on Tuesday to the Italian Stock Exchange denying reports that it intends to sell its grid and saying it had filed an official complaint with Italy's market watchdog Consob.
The telecoms and communications giant last week said that it is in talks with News Corp on a possible content agreement, but it has stressed that there are no agreements regarding a possible share swap.
The Rome daily La Repubblica reported on Monday that such a deal is unlikely because Italian broadcasting law would impose a series of restrictions which could limit the growth potential in Italy of media tycoon Rupert Murdoch's News Corp.
The Telecom Italia group is the leading provider of fixed and cellular telephones in Italy, with 72 percent of the fixed-line market and 40 percent of the mobile market.
It is also the primary Internet provider with 6 million broadband customers.
Sky Italia, which launched a digital satellite television on July 31, 2003, reported 3.7 million subscribers as of March this year, about 95 percent of which have chosen a premium package including an array of sports and/or movie channels.