Another twist in Italy’s national broadband tale

News

The Italian government has approved proposal for a single broadband network that could be presented to Telecom Italia’s board next week.

The government has been trying to set up a single national broadband company for many months, but has failed to reach agreement with stakeholders, and most especially Telecom Italia. 

The CEO of the former incumbent is insisting on a majority, controlling stake in the new organisation; the government is OK with the majority part of the deal, but it and rival Open Fiber are not happy with the controlling bit.

Wholesale model

The single broadband network would have to be equally available to all service providers as the country strives to close the digital divide. To that end, the government’s plan is that Telecom Italia’s so-called secondary (access) network should be merged with that of rival operator, Open Fiber.

So while Telecom Italia might get the majority share, its role as wholesaler will be strictly regulated under the latest plan.

Earlier this month, TIM was pretty much forced into postponing its decision to sell 37.5% of its last-mile network to KKR after the government asked for more time to broker a broader network agreement including Open Fiber. That deadline is next Monday.

More complications

Today TIM and Tiscali signed a Memorandum of Understanding to define the terms of a strategic partnership to develop the ultra-broadband market through Tiscali’s commercial participation in the FiberCop co-investment project.

FiberCop is the latter newly established vehicle created by the transfer of TIM’s secondary network, the participation of the KKR Infrastructure Fund, and the activities of FlashFiber, a joint-venture between TIM and Fastweb.

The first step of the project is to streamline Tiscali’s network, creating the conditions to facilitate the migration of its customers to FiberCop's ultra-broadband network. This will also allow Tiscali to substantially reduce the network infrastructure costs, avoiding duplications.

Longer term

In the medium to long term, and in line with FiberCop’s development plan, the agreement will allow Tiscali to activate a significant part of its access network on the newly established infrastructure.

TIM and Tiscali will subsequently assess, in full compliance with the rights and prerogatives recognised to shareholders on the basis of the bylaws and any shareholders’ provisions, the possibility of Tiscali acquiring a stake in FiberCop.