New York: US telecom company AT&T and Mexican cellular services provider America Movil are in talks to buy a stake in Italy''s main telecom company Telecom Italia''s controlling company.

Telecom Italia is Europe''s fifth largest telecom group and, according to AT&T, has a market capitalisation is about €40 billion.

The two companies are keen to buy a third of Olimpia, a holding company and Telecom Italia''s main shareholder with around 18 per cent stake, for about €4.8 billion (approximately Rs27,772.8 crore).

The offers value Telecom Italia shares held by Olimpia at €2.82 each, minus Olimpia''s debt, AT&T said in a statement. A successful deal would allow AT&T to expand its international business to offset a decline in its traditional phone subscriptions.

The value would make Olimpia''s 18 per cent stake worth around 7.2 billion euro. Should AT&T and America Movil succeed in the purchase, their stakes would be worth around 2.4 billion ($3.2 billion) each.

Olimpia and Italian company Pirelli, which holds 80 per cent of Olimpia, said there would be exclusive negotiations until April 30.

Talks between Pirelli and a group of Italian banks for the sale of its Telecom Italia stake have been bogged down over price. Pirelli has booked the holding at €3 per share against a market price nearer €2.14.

AT&T and America Movil say they would offer a put option to Pirelli and Sintonia on their remaining Olimpia stake and their Telecom Italia holdings for a year after any deal.

AT&T said the investment would help boost its enterprise segment, or many of which are doing business abroad. AT&T spokesman Michael Coe said, "We need strong assets and relationships in key areas, Europe being one. By establishing a stronger, closer relationship with Telecom Italia we will be able to exchange best practices. We''ll be able to do joint product and technology development."

Investment bank Mediobanca (MDBI.MI) and insurer Generali (GASI.MI), which have joined forces with Olimpia as key investors in Telecom Italia, have right of first refusal on the Olimpia stake.

If they take up those rights, AT&T and America Movil will each get an indemnification equal to €16 million.