Telefonica has upped its interest in Italy's biggest telecoms provider, Telecom Italia.
The Spanish telco announced on Tuesday that it had reached an agreement to increase its share of Telco, the holding company which owns 22.4 percent of Telecom Italia.
Telefonica has now increased its stake in Telco to 66 percent, at a cost of €324m, and it will subsequently get the option to raise that to 70 percent for a further €117m.
It also announced today that it will not increase its direct shareholding in Telecom Italia itself and will stay out of any decisions involving its business in markets where both Telefonica and Telecom Italia operate.
"Telefonica renews its commitment to contribute to the development of Telecom Italia in its domestic market, with synergies and the sharing of best practices. At the same time, the renewed shareholder stability in the Italian company will enable it to explore the best strategic options to recover its financial flexibility," it said in a statement.
Takeover talk has swirled around Telecom Italia for some time, thanks to the substantial debt attached to the company — around €29bn was listed on the company's books in its financial results for the first half of the year.
Telecom Italia is in the middle of a substantial overhaul of its operations, including spinning off its fixed-line business. It is also reportedly considering splitting up its consumer and enterprise units in Italy, and selling off its infrastructure.
More clarity about the company's future direction is expected after a board meeting to be held on 3 October.