Cassa Depositi e Prestiti (CDP), the state investment bank that holds a 10% stake in TIM as well as a 60% stake in rival Open Fiber, still has hope for a merger between the two companies

For around two years now, the Italian government has toyed with the idea of creating a single national broadband network across the country, hoping to prevent overbuild of infrastructure, accelerate fibre rollout, and reduce cost for consumers. 
This national network has typically been conceived as a merger between incumbent operator TIM’s fibre business with its fixed line rival Open Fiber, but many months of negotiations in late 2019 and early 2020 ultimately ended in failure. At the time, TIM said it would only agree to a merger if it could retain a controlling stake in the newly created business, something which the government, then under Guiseppe Conte, would not concede. 
The swearing in of Mario Draghi as Prime Minister in February 2021 potentially offered some end to the deadlock, but the administration’s initial re-evaluation of the deal quickly led to further complications.
Now, at the start of 2022, the CDP, investors in both TIM and Open Fiber, are once again voicing their support for the creation of a single national network. 
Giovanni Gorno Tempini, president of the CDP and TIM board member, said that a single network would be needed to maximise the value of European recovery funds.
“Broadband is the centre of attention and we believe that the launch of the PNRR (National Recovery and Resilience Plan)… makes the design of a single network even more important to avoid duplication of investments,” said Tempini, noting that there was “no alternative” to revisiting the potential merger.
He noted that time was of the essence, suggesting that the benefits of such an arrangement would rapidly diminish over the coming years.
“We need to hurry: in two years’ time, possible synergies on investments and projects could be less relevant,” he said.
For TIM, however, any potential discussions would come at a time of great upheaval. The company is currently facing a potential takeover by US investment fund KKR, who made an offer to buy the company in November for around €10.8 billion. The firm had previously purchased a minority stake in TIM’s ‘last mile’ fibre network for €1.8 billion back in 2020, with sources suggesting that KKR would carve out and further monetise TIM’s valuable fibre network.
The offer quickly indirectly led to the resignation of Luigi Gubitosi, who stepped aside after the company was forced to issue yet another profit warning. TIM promoted TIM Brasil CEO Pietro Labriola to general manager in December, with a permanent replacement CEO expected to be announced later this month.
As a result, it seems unlikely that discussions between Open Fiber, TIM, and the government surrounding the single network will begin again in earnest until TIM’s own internal overhaul is complete.
In related news, the Italian broadband market continues to grow ever more competitive, with the end of 2021 seeing broadband operators Tiscali and Linkem agree to merge. The move will create Italy’s fifth largest fixed line operator, with around 1.2 million retail customers. The deal is expected to finalise during the first half of 2022.
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