AT&T; to Work on $25-Billion Italian Phone Modernization

ROME —  Italtel Spa, the state-owned telecommunications equipment maker, said Tuesday that it selected American Telephone & Telegraph Co. as a partner, virtually ensuring AT&T; a role in Italy’s huge telephone modernization project.

The government is planning to spend more than $25 billion (35 trillion lire) through 1993 on the modernization.

AT&T; and Italtel have not disclosed details of their partnership. But New York-based AT&T; is expected to provide Italtel with advanced switching technology and other expertise in exchange for helping the Italian company market its products outside of Italy.

The arrangement will give AT&T; its first major foothold in Western Europe. A joint venture with NV Philips of the Netherlands has largely failed to crack the European telecommunications market.

AT&T;’s stock gained 50 cents to $32.125 on the New York Stock Exchange.

Executive committees of Italtel and its parent company, Stet Spa, ratified the choice of AT&T.;

Formal approval is expected to come later this week when the executive committee of Stet’s parent group, giant state holding group Istituto per la Ricostruzione Industriale, or IRI, meets.

Prime Minister Ciriaco De Mita, despite some dissent from his own cabinet, has said the government would back IRI’s decision.

West German electronics group Siemens AG, Amsterdam-based Alcatel NV and Sweden’s L. M. Ericsson also submitted bids.

“We are delighted with the recommendation from Stet and look forward to the decision by the IRI board of directors on Thursday,” AT&T; spokesman Burt Wolder said in New York.