Italy ups ante to create single broadband network

A Telecom Italia's control unit for fibre optics in Perugia, Italy.
A Telecom Italia's control unit for fibre optics in Perugia, Italy.

Italy is positioning to become an influential shareholder in a tightly regulated broadband operator it plans to create by brokering a merger of Telecom Italia’s (TIM) fixed-line access network with state-controlled Open Fiber.

The plan, championed by Economy Minister Roberto Gualtieri from the co-ruling centre-left PD party, envisages transferring a broad range of TIM assets into the new player, which could be a candidate for grants from Europe’s Recovery fund.

Rome, which sees a single, fast broadband network as crucial to closing Italy’s digital gap, aims to use the European funds to upgrade the former phone monopoly’s network from copper to fibre by 2025, a government source said.

The Treasury declined to comment on the plans, as did a European Commission spokesperson.

TIM and Open Fiber, a wholesale-only broadband unit jointly owned by government-controlled utility Enel and state lender Cassa Depositi e Prestiti (CDP), have been seeking ways to combine their assets.

Telecom Italia said on Wednesday it wanted to keep the majority of the unified network.

CDP and TIM declined to comment.

Under the government-sponsored plan, the broadband unit could initially be majority-owned by TIM, but should offer equal access to all market players, sources said.

Rome aims to emerge as the second-largest shareholder in the venture, after TIM, and have vetting powers over strategic issues.

It is unclear if the scheme will have the backing of TIM’s competitors, who are concerned about dealing with a player whose main shareholder, former monopoly TIM, could create potential conflicts of interest.

The government on Tuesday got TIM to postpone the planned minority-stake sale of its so-called last-mile grid - the final leg of its network to end users - to US fund KKR & Co Inc to August 31.

That grid is still mostly copper.

The co-ruling 5-Star Movement has been pushing for CDP to increase its 10% stake in TIM to put it on par with top shareholder Vivendi at about 25% and negotiate as equals a single broadband strategy.

The office of Prime Minister Giuseppe Conte said on Tuesday it was in favour of including other players in a broader TIM/KKR deal aimed at creating a single national network. — Reuters


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