Telecom Italia will incorporate Check Point products into services it provides to businesses. Check Point makes software that provides secure communications across the Internet and corporate networks, or intranets.
Shares in the Israel-based company jumped $30.94 to $284, a new 52-week high, before slipping to $278. The shares have traded as low as $11.50 in the past year.
Telecom Italia's shares rose 6 cents to $179.06 on the New York Stock Exchange.
"It's an important win for the company," said Eric Zimits, an analyst at Chase Hambrecht & Quist. "The whole category of service providers is an important category for Check Point.
"What Check Point typically does is sell software to businesses who then set up a firewall or virtual private networks. Selling to service providers like telecom companies acts as another distribution channel," said Zimits.
The analyst also said that Check Point will collect licensing fees depending on how many customers a service provider reaches.
Telecom Italia is the country's leading provider of three key services: telephone lines, wireless service and Internet access.
In 1999, Check Point Software generated net income of $95 million on sales of $214 million. According to First Call, a consensus of 16 Wall Street analysts rate the stock at "buy" and expect the company to earn 38 cents a share for the March quarter.