The Italian government has raised concerns over Telefonica’s 42.3 percent stake in Telco, the holding company that controls Telecom Italia, the Italian incumbent operator. Italy’s undersecretary for telecommunications, Paolo Romani, described the stake as “a relevant problem that needs to be solved” and one that is being monitored closely by the government, reports Dow Jones Newswires. The report notes that Telecom Italia’s shareholding structure has heated up in recent months, ahead of an October deadline to renew or dissolve Telco’s interest in the Italian firm. Telco is Telecom Italia’s largest shareholder with a 24.5 percent stake and is owned by Spanish phone giant Telefonica, Italian banks Intesa Sanpaolo and Mediobanca, insurer Assicurazioni Generali and the Benetton family. Telefonica’s 42.3 percent stake in Telco gives it an indirect 10 percent stake in Telecom Italia.

The issue has raised anti-trust concerns in markets where both Telefonica and Telecom Italia control rival operators. Last month, Argentina’s National Commission for the Defense of Competition (CNDC) ruled that Telefonica has assumed a “dominant position” in Argentina’s telecoms market because the Spanish group controls Telefonica Argentina but also has an interest in rival operator Telecom Argentina as a result of its stake in Telecom Italia (Telecom Italia has a 50 percent stake in Sofora, the holding company that controls Telecom Argentina). The CNDC has reportedly given Telecom Italia one year to sell its stake in Sofora.