Monday, 14 June 2021

Draghi govt to pull plug on Italian single network scheme

by Harry Baldock, Total Telecom
Thursday 06 May 21

Plans to merge TIM and Open Fiber to create a single national fibre network have reportedly been dashed, with the Italian government loathe to create a telecoms monopoly

When Mario ‘Super Mario’ Draghi took control of the Italian government back in February, a plan to create a single Italian fibre network through the merger of TIM and Open Fiber had already been in discussion for many months.  Now, after much debate, reports suggest that the Italian government may be looking to abandon this plan altogether, arguing that the creation of a single network would constitute a return to a telecoms monopoly. Documentation sent to the EU regarding Italy&rsquo…

When Mario ‘Super Mario’ Draghi took control of the Italian government back in February, a plan to create a single Italian fibre network through the merger of TIM and Open Fiber had already been in discussion for many months. 

Now, after much debate, reports suggest that the Italian government may be looking to abandon this plan altogether, arguing that the creation of a single network would constitute a return to a telecoms monopoly. Documentation sent to the EU regarding Italy’s recovery plans reportedly reflects this position, referring to multiple ‘broadband networks’, rather than just one. 

The plan to create a single network had always been contentious. TIM had said it would only agree to a merger if it were to retain a controlling stake in the fibre business, but the government, then under Guiseppe Conte, was vehemently against this. Nonetheless, the government saw a potential merger as an excellent solution for rapidly boosting the country’s fibre broadband penetration, as well as avoiding unnecessary duplication of infrastructure deployment. 

By the time the Draghi administration took over, the negotiations were finally beginning to show some positive movement, with the Conte government suggesting that TIM could retain power of the new entity provided it agreed to a wide range of conditions. The new Italian government, however, immediately called for a re-evaluation of the plan, which saw discussions mired once again.

Various alternatives were suggested instead of the creation of a single network. Innovation Minister Vittorio Colao, for example, had suggested launching tenders for rolling out fibre in ‘grey areas’, where only a single fixed network operator is available to customers. Another suggestion was Open Fiber instead merge with TIM’s ‘last mile’ fibre network, FiberCop, thereby allowing TIM to keep control of its primary network. By the end of last month, there were even reports that the government could look to create a consortium from all of the nation’s fixed operators. 

Nonetheless, talk of the national network continued. In fact, one of the hurdles towards the merger could have, in fact, been mitigated earlier this week, when Enel sold its 50% stake in Open Fiber, giving 10% to state lender Cassa Depositi e Prestiti (CDP), thereby giving it a controlling stake in the business, while Australian fund Macquarie purchased the remaining 40%. TIM CEO Luigi Gubitosi said that the move was “a good thing”, adding that “talks over the single network will be easier” as a result.

But despite this, it seems that the single network’s perceived threat to the market’s competitiveness is just too big an obstacle to overcome. Instead, the government will aim to foster a quicker rollout of infrastructure in rural areas, while encouraging competition for services in urban areas. According to sources, Rome will also be looking to encourage co-investment projects between the nation’s operators, not just in fibre but also in mobile technologies, including 5G. 

While the scrapping of the single network plan would certainly be a win for antitrust regulators, Italy remains one of the worst performing countries in Europe when it comes to adopting new telecoms technologies and viable, aggressive strategy will be needed to boost the country’s performance to levels comparable to their European neighbours. 

 

How can Italy accelerate its fibre deployment to meet government targets? Find out from the experts at this year’s Connected Italy event. For more information, contact Rob Chambers at rob.chambers@totaltele.com

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