The board of Telecom Italia gave its agreement in principle yesterday for a "merger of equals" with German operator Deutsche Telekom, a statement from the Italian company said. "The board approved the principle of an industrial alliance" with Deutsche Telekom, said the statement.

Telecom Italia said however "it wanted clarification of the means with which the German government would limit the use of its voting rights in the new merged company." Deutsche Telekom was reportedly demanding a stake of 56 per cent, and therefore control, but the Italian government wanted the deal to be one of equal parts.