Italy near to cop-out over plans to merge wholesale fibre

Italy near to cop-out over plans to merge wholesale fibre companies

07 May 2021 | Alan Burkitt-Gray

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Italy appears to be moving away from the idea of a full-blown merger of its fibre infrastructure, led in part by former Vodafone chief Vittorio Colao, who wants to retain competition.

The idea had been to merge FiberCop, which TIM — the former Telecom Italia — had created with Swisscom’s rival fibre company Fastweb, completely with Open Fiber, owned by Cassa Depositi e Prestiti (CDP), a state bank, and electricity company Enel.

CDP is also the second largest shareholder in TIM, complicating competition rules. French media group Vivendi is the biggest shareholder.

Both FiberCop and Open Fiber act as equal access wholesale providers, and a merger would have created a monopoly wholesale fibre company for the whole country. 

But reports from Rome and Milan this week suggest prime minister Mario Draghi wants to retain competition, under the influence of Colao (pictured), now digital innovation minister in his government.

Draghi and Colao are both indicating they want to retain a competitive element in the Italian fibre market. This would enable them to get FiberCop and Open Fiber to compete to connect Italy’s significant unconnected areas.

Draghi appointed Colao in February 2021 to lead his government’s digitisation agenda. The Draghi government wants to ensure everyone in Italy has 1Gbps speeds in only five years’ time.

At the moment only 24% of the population has access to any sort of high-speed broadband. The total cost of Draghi’s 1Gbps plan is put at €8 billion.

The Financial Times revealed last night that Draghi’s Covid-19 economic recovery plan refers to “broadband networks” with “full competition in the supply of services”.

The Reuters news agency is suggesting that an alternative policy would be to merge TIM’s secondary network within FiberCop with Open Fiber, leaving the primary network, connecting switches to street cabinets, in TIM’s hands.

The European Union, which would fund much of the €8 billion Italy wants for its Covid-19 recovery plan, dislikes the idea of a vertically integrated TIM, controlling services as well as the fibre network.

TIM said in a statement later on Friday: “With regard to the press rumours circulating today, which led to a negative impact on the share price on the stock market, TIM hereby announces that it will file a complaint with Consob [Italy’s financial regulator] to protect the company and its shareholders.

“TIM points out that the interpretations reported by the press relating to the content of the Italian Recovery and Resilience Plan — the purpose of which is the digitisation of the country and the completion of the network in areas where private investments are insufficient — are entirely inappropriate and unsubstantiated.

“In fact, the relationship between the aforementioned plan and possible aggregations of companies currently operating in the sector is not understood given that, as mentioned several times also by government representatives, these aggregations are included among market operations exclusively subject to the will of the companies involved and their shareholders.”