Open Fiber to build wholesale FTTH network as minister calls for TIM merger

Open Fiber map.jpg

Open Fiber, the sole wholesale-only player in the Italian broadband market, has selected Nokia for a fibre-to-the-home (FTTH) project that will bring high-speed broadband services to the small towns and rural areas of Italy.

At the same time Giovanni Tria, the Italian minister of economy and finances, has told reporters that a single telecoms network in Italy would be a more efficient solution and added that the government could be expected to favour it.

That would entail a merger between Open Fiber’s network and TIM’s fibre and copper network.

Some executives at TIM – the former Telecom Italia – have told Capacity, on condition of anonymity, that they also believe a single national network makes sense. Earlier this week Bloomberg reported thatTIM CEO Luigi Gubitosiis to hire advisers “to study ideas including a network-sharing deal or merger with smaller rival Open Fiber”.

Tria, an economist and university professor, Tria told the Reuters news agency at the World Economic Forum in Davos this week that, while he favoured a single network, it was a matter for private companies to decide.

Nokia said that the FTTH network it will build for Open Fiber will deliver 1Gbps to customers’ homes.

Stefano Paggi, network and operations director at Open Fiber, said that the network could eventually work at much higher speeds: “With Nokia’s solutions we will be able to offer services at 10Gbps and in the future at 40Gbps on the access network. We will also have the opportunity to adopt the SDN (software defined networking) paradigm and therefore to maximize the potential of a new generation access network, with high automation, programmable and integrated with cloud environments.”

Nokia’s Alessandro Manno, director global enterprise Italy, said: “Nokia has the products and delivery capability to support Open Fiber in this deployment journey.” He said the company would give “Open Fiber the confidence to adopt new technologies, enter new markets and extend the performance of existing networks”.

Open Fiber is a 50-50 joint venture between Italian energy company Enel and Cassa Depositi e Prestiti (CDP), the Italian state investment bank, which separately owns a near-5% stake in TIM.

TIM is the subject of a shareholder battle between Vivendi, the French media company that is the largest shareholder with 24%, and Elliott Management, a US-based group of so-called “activist investors” who represent owners of around 9% of the company.

Elliott currently has the upper hand, having forced the dismissal of TIM’s CEO, Amos Genish, a Vivendi nominee, and the appointment in his place of Gubitosi, a former Wind executive who is an Elliott nominee to the board.