MILAN (Reuters) - Spain's telecoms group Telefonica has reached an agreement to raise its stake in Telco, the holding company that controls Telecom Italia, to an initial 65 percent with an option to bring the stake to around 70 percent, a source with direct knowledge of the situation told Reuters on Monday.
Telefonica is Telco's biggest shareholder with a stake of 46 percent, equivalent to about 10 percent of Telecom Italia shares. The others investors in Telco are Italian banks Mediobanca and Intesa Sanpaolo and insurer Generali.
The complex deal, which still has to be finalised, values each Telecom Italia share at "just above" 1 euro, nearly twice the current market price.
Telco controls Telecom Italia with a 22.4 percent stake. Telefonica was not immediately available for comment. The Italian investors declined to comment.
(Reporting by Danilo Masoni, writing by Francesca Landini, editing by Lisa Jucca)