Italy ups the ante in plan to create single broadband network, sources say
* Italy pushes to have a unified ultra-fast broadband
* New operator could receive grants from Europe's recovery
* Rome aims to emerge as second shareholder in new player
* Enel is considering exiting Open Fiber, ensuring Rome
(Adds Enel comments in ninth and penultimate paragraph)
By Giuseppe Fonte
ROME, Aug 6 (Reuters) - Italy is positioning to become an
influential shareholder in the broadband operator it plans to
create by brokering a merger of Telecom Italia's (TIM)
fixed-line access network with state-controlled Open Fiber,
three sources said.
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.
Those assets include TIM's network that runs from switching
centers to households.
Rome, which sees a single, fast broadband network as crucial
to closing Italy's digital gap with the rest of Europe, 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 government's plans
for a broadband network, while a spokesman for the European
Commission said it was too early to comment on any specific
proposals from member states for the use of the Recovery and
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 talking since
June last year on ways to combine their assets, but to no avail.
Telecom Italia said on Wednesday it wanted to keep the
majority of the unified network.
CDP and TIM declined to comment.
Enel said it agreed with Rome on the need to rapidly
complete the cabling of Italy with fiber and backed any move
that speeded up the process based on wholesale-only open access
for all parties.
Under the government-sponsored plan, the broadband unit
initially could be majority-owned by TIM, but should offer equal
access to all market players and maintain a network ownership
structure open to new operators, sources said.
A monitoring trustee overseeing the broadband unit's
investment policy and pro-market commitments would be appointed
by Italy's communications watchdog, whose powers would be
strengthened by the government.
Rome aims to emerge as the second-largest shareholder in the
venture, after TIM, and to have vetting powers over strategic
issues through CDP or other state agencies, the sources said.
It remains to be seen whether the scheme will have the
backing of TIM's competitors, who are concerned about having to
deal with a player majority-owned by the former monopolist TIM,
potentially creating conflicts of interest issues, an industry
To win time to hammer out details of the overall project,
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 U.S. fund KKR & Co Inc
to Aug 31.
That grid, which runs from cabinets to households, is still
The co-ruling 5-Star Movement has been pushing in recent
months for CDP to increase its 10% stake in TIM to put it on a
par with top shareholder Vivendi at around 25% and
negotiate as equals on a single broadband strategy.
The office of Prime Minister Giuseppe Conte, an academic
with no political affiliation, said on Tuesday it was in favour
of including other institutional and market players in a broader
TIM/KKR deal aimed at creating a single national network.
To offset KKR's presence, CDP or another state agency would
first invest in Fibercop, a TIM vehicle that will hold the
incumbent's last-mile network.
Then, following the merger with Open Fiber, TIM would fold
its primary network, connecting switching centres to cabinets,
into Fibercop, giving the new player the entire fixed-access
"TIM would instead retain mobile, retail, 5G and data center
businesses as well as its backbone network," one of the sources
He added that Enel's CEO, Francesco Starace, was considering
exiting Open Fiber, selling part of Enel's 50% stake to CDP or
other state agencies to ensure Rome control and part to other
Enel said it had received unsolicited offers for its stake
in Open Fiber from investment funds but said no sale process has
Vivendi declined to comment.
(Reporting by Giuseppe Fonte in Rome
Additional reporting by Elvira Pollina and Stephen Jewkes in
Editing by Matthew Lewis and David Holmes)
First Published: 2020-08-06 08:00:00
Updated 2020-08-06 12:29:25
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