News
Italian utility seals 714 million deal; raises five-year fibre rollout, investment targets.
Enel has agreed to acquire Italian fibre network operator Metroweb for €714 million, a deal that will enable the utility company to ramp up its already ambitious plan to deploy a wholesale fibre-to-the-home (FTTH) network.
Under the deal, Enel’s fibre operation, Enel OpEn Fibre (EOF), will carry out a capital increase of €714 million reserved exclusively for Enel and state-owned bank Cassa Depositi e Prestiti (CDP), parent of Fondo Strategic Italiano (FSI), which owns 46% of Metroweb. As a result of the capital increase, Enel and CDP will control equal stakes in EOF.
EOF will then acquire all of Metroweb’s share capital for €714 million, valuing Metroweb at €814 million. Enel said the deal is likely to include an option for Metroweb’s majority shareholder F2i to acquire up to 30% of the merged entity, which will be renamed New EOF. That option will expire on 15 October.
"The acquisition of Metroweb enables us to push forward our plan for the development of ultra-broadband and to widen the scope of cabling operations in order to include the country’s major cities while at the same time reducing this initiative’s risk profile through our partnership with CDP and, hopefully, F2i," said Enel CEO Francesco Starace, in a statement on Thursday.
Indeed, EOF originally planned to spend €2.5 billion rolling out wholesale FTTH networks in 224 Italian cities by laying fibre alongside its electricity cables, with a view to passing 7.5 million premises by 2021.
In light of this week’s deal with Metroweb – which operates a fibre network in Milan and is building networks in Bologna and Turin – EOF has raised its budget to €3.7 billion and now plans to deploy infrastructure in 250 cities, passing 9.5 million premises by the same date.
Enel expects to complete the transaction by the end of November.
Thursday’s deal ends years of speculation about Metroweb’s future and represents a blow to Telecom Italia.
Metroweb was routinely courted by the Italian incumbent, which expressed interest in it in November 2014, and had a subsequent bid rejected by FSI and F2i in April 2015.
In October 2015, the parties entertained the prospect building a shared FTTH network but no deal emerged. Then, in April this year, reports claimed that negotiations between Telecom Italia and Metroweb’s parents were back on.
However, a month later, Reuters reported that Enel was lining up a Metroweb bid of its own.
In a sign that perhaps the Metroweb deal wasn’t going to go its way, Telecom Italia this week agreed to form an FTTH joint venture with Fastweb.
Now that Enel’s pursuit of Metroweb has been successful, Telecom Italia and Fastweb are set to face off against an even more ambitious fixed-line competitor.
