The MoU reportedly offers TIM the majority ownership it cited as a key condition in previous discussion, but includes strict government restrictions
There has been a back-and-forth between the Italian government and TIM over the creation of a national fibre network for some time now, but the impasse could be overcome on Monday, with reports of the government moving to present TIM with a Memorandum of Understanding (MoU) that tries to meet the operator in the middle.
The government is seeking a merger of TIM’s fibre assets with those of Open Fiber, creating a nationwide fibre network supplier that would help to rapidly expand broadband coverage and avoid the expensive duplication of infrastructure. However, TIM has declined all previous proposals, arguing that it should majority own the resulting business.
In their latest exchange, TIM CEO Luigi Gubitosi last week told reporters that TIM would accept no less than 50% equity in any joint venture, but deputy industry minister Stafano Buffagni shrugged off the idea in a separate interview, saying such ownership would never be accepted by regulators and antitrust authorities.
“Under a regulatory and antitrust profile, a single network company that supplies wholesale access services to all operators cannot be in the hands of a single, vertically integrated majority shareholder,” he told la Repubblica.
But that may not be entirely true.
Yesterday, media was reporting that a proposed MoU had been passed for approval to Prime Minister Giuseppe Conte and other top ministers by the head of the CDP, the government majority-owned investment bank that is TIM’s second biggest shareholder and joint controller of Open Fiber with Enel.
The plan presented reportedly will allow TIM majority ownership of the new joint venture, but would impose strict restrictions, including that TIM not be allowed a majority of board members in the resulting company. TIM will apparently have the right to nominate a CEO of the new company, but the CDP will have their choice of chairman and retain the right of veto.
This offer represents the biggest compromise on the government’s behalf so far, though whether this will offer TIM the retention of enough control to tempt them towards a deal remains to be seen.
Relations between TIM and the state may finally be cooling, with the government giving the green-light to the investment company KKR to buy a 37.5% stake in TIM’s access network business FiberCorp for €1.8 billion. In fact, it may be this move, which strengthens TIM’s position in the fibre market considerably, that has spurred the government to target slightly more lenient merger terms.
What effect would the creation of a national fibre network have on Italy’s connectivity landscape? Find out from the experts at this year’s Connected Italy
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