Telecom Italia deal with C&W runs into trouble

Telecom Italia has backed out of a deal to buy Cable & Wireless' (C&W) 20 per cent stake in French mobile operator, Bouygues Telecom.

However, the companies have insisted the collapse of the deal - along with Telecom Italia pulling out of agreements to buy parts of several other telcos currently part-owned by C&W - will not jeopardise an alliance formed by the companies just three months ago.

Telecom Italia already owns over 10 per cent of Bouygues Telecom, but its plans to control around a third of the company's shares were scuppered by Bouygues SA - the construction giant which owns most of the mobile operator.

In a statement issued Monday, C&W said: "Cable & Wireless continues to make good progress in the detailed discussions with Telecom Italia on the first part of their global partnership, including Telecom Italia's participation in global networks and services to both companies' multinational customers."

C&W and Telecom Italia form the world's second largest long-distance carrier by call volume, although Telecom Italia maintains it has not severed links with AT&T or Unisource.

In separate news, Cable & Wireless Communications is rumoured to be seeking an alliance with Telewest - one of the 'big three' cable operators now dominating the UK market. NTL, another major player in the cable industry, recently abandoned merger talks with Telewest.