One step forward, two steps back: TIM and Italian govt clash over national broadband network

The Italian government have been trying to find a way to create a single national broadband network for a long time now, with the latest attempt to do so being via the proposed merger of Open Fiber and Telecom Italia (TIM)’s fixed-line assets.

 

The government claims that such a tie-up would be the most efficient way for the country to achieve its broadband goals, making network deployment very efficient and helping to avoid duplication of investment.

 

However, TIM is much less keen on the idea, with their main argument being that they should retain a controlling stake in any future venture with Open Fiber.

 

Just yesterday, TIM CEO Luigi Gubitosi told reporters that TIM would provide broadband to Italy “with or without Open Fiber” and said that the company would accept no less than 50% equity in any joint venture.

 

However, the government does not want to see wholesale network access for all operators controlled entirely by one company. 

 

“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,” deputy industry minister Stefano Buffagni today told la Repubblica.

 

At the start of this month, KKR offered TIM €1.8 billion for its new access network business known as FibreCorp. For a long time, the Italian government had been considering increasing its ownership of incumbent TIM from 10% to 25%, and a deal with KKR could help drive the government once again towards this move, to balance the US investment firm’s investment. This increased stake could, in theory, help them to broker a deal for the Open Fiber merger.

 

However, the last two days’ spat between the government and TIM’s executive show that the two parties are still very far from reaching an amiable agreement.