TIM-Vodafone agreement creates ‘Italy’s biggest tower company’

26 July 2019 | Laurence Doe

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Italian and British telcos TIM and Vodafone have created what they claim is Italy’s biggest tower company and the second largest in Europe after today agreeing on active network sharing partnership with Inwit.

The active network sharing partnership for their 5G and 4G networks is an expansion of their existing agreement of 10,000 sites, and will now allow them to roll out 5G faster over a combined infrastructure of more than 22,000 towers.

Discussions with Inwit began in February. TIM and Vodafone will now combine their respective passive networks within Inwit and cooperate on upgrading their respective fibre transmission networks for mobile backhaul.

Both companies will continue to separately control their spectrum assets and network quality and functionality, which will ensure "the flexibility needed to innovate and compete in the market in order to meet the needs of their respective customers", they said.

“Completion of this transaction is key for the country’s infrastructure and technological development and will enable us to further accelerate the deployment of 5G, with Italy already among the countries taking a lead in trials of this new technology,” said Luigi Gubitosi (pictured left), CEO of TIM. “Thanks to what will from today become Italy’s biggest tower company, we will be able to offer households and businesses privileged access to the technological revolution that has just begun.”

TIM and Vodafone take joint control of Inwit through equal stakes in the company of 37.5% each, with the option of reducing the stakes down to 25% after a three-year lock-up agreement ends.

Inwit, whose CEO is Giovanni Ferigo (pictured center), is currently managed and coordinated by TIM.

The infrastructure sharing agreements are part of Vodafone’s plans to reduce debt, which led it to create TowerCo, Europe’s largest tower portfolio, a development revealed earlier today. TowerCo covers Spain and the UK as well as Italy. This segmentation of its tower business will also allow it to increase the pace of its 5G rollouts.

Vodafone will receive €2.14 billion and expects to receive another €1 billion in increments over time.

Vodafone and TIM’s agreements will focus on making 5G deployment in Italy “more efficient”, with a wider geographic area and “significantly” lower costs, with the two parties expected to benefit from synergies worth a total of over €800 million each over the next 10 years. The companies also expect an additional annual €200m improvement in new Inwit’s EBITDA by 2026 “through synergies, commitments and new potential opportunities”.

The transaction, which needs regulatory consent, will also allow TIM to cut debt by more than €1.4 billion over time.

Vodafone and TIM will now upgrade their respective mobile transmission networks, adding higher capacity fibre, which will enable customers to fully benefit from 5G’s new features, such as faster speeds and low latency, as well as providing greater economies of scale.

“5G has a key role to play in modernising the country,” said Aldo Bisio (pictured right), CEO of Vodafone Italia. “It will provide the technology platform from which to launch innovative new services capable of making business models more efficient and improving productivity throughout the value chain, helping to build a more competitive digital economy. Network sharing reaps the benefits of 5G and at the same time reduces the impact on the environment and lowers rollout costs, allowing more investment in services for customers.’’