Officials confirmed Sunday that AT&T and its Mexican affiliate, America Movil (AM), have entered exclusive negotiations with Pirelli toward the acquisition of Pirelli’s indirect controlling stake in Telecom Italia (TI). Currently, Pirelli owns 80% of Olimpia, a holding company with 18% of TI’s ordinary shares, that, in turn, controls TI by nominating a majority of TI’s board. Subject to the completion of due diligence and an agreement, AT&T and AM would acquire from Pirelli a combined stake of 66.6% in Olimpia. According to AT&T, the deal is contingent upon AM’s investment, and exclusive talks among the parties are expected to wrap up by the end of this month. News of the potential deal follows on Swisscom’s recent bid for Fastweb, the second-largest broadband provider in Italy. Noting that three of Italy’s four wireless service operators are controlled by foreigners, sources say an agreement among AT&T, AM, and Pirelli could raise concerns among government officials who are keen on keeping TI in Italian hands. Declaring that AT&T “is continually reviewing opportunities that will help it serve the company’s growing global customer base,” AT&T predicted that its potential investment in Olimpia “would provide [TI] with a strategic partner with whom it can share best practices and pursue joint interests.”