Italian telco says it ‘behaved correctly’ in FTTH tie-up with rival, but competition authority fears deal could damage market dynamic.

Telecom Italia on Thursday defended its actions with regard to its fibre broadband deal with rival Fastweb after Italy’s antitrust watchdog launched an investigation into the pact, looking specifically at whether it will harm competition in the market.

"TIM confirms that it has behaved correctly and the industrial project is valid," the telco said, in a statement, noting that the Fastweb deal will enable a faster rollout of fibre-to-the-home (FTTH) services in Italy, in line with the country’s ultra-broadband strategy.

Its comments came after Italy’s competition body, the Autorita Garante della Concorrenza e del Mercato (AGCM) earlier in the day revealed that it has opened an investigation into whether the FTTH joint venture deal inked by TIM and Fastweb in July violates competition law.

The joint venture, known as Flash Fiber, aims to enable a more efficient FTTH rollout in Italy; the telcos plan to spend €1.2 billion over four years extending FTTH coverage to 3 million homes in major cities.

AGCM recognised the intent of the venture, but noted that "it could, at the same time, potentially impede, restrict or distort competition in the national markets for wholesale access to the fixed network and retail broadband and ultra-broadband services."

Telecom Italia and Fastweb will work together on fixed broadband network strategy, the AGCM said. Given that they are the two main vertically integrated operators in Italy, competition could be affected, it said.

For its part, TIM reiterated that the intent of Flash Fiber is to accelerate the development of FTTH in Italy.

Nonetheless, "the company will assure the Authority maximum collaboration and transparency during the proceedings," it said.

The deal between TIM and Fastweb came about against a backdrop of new – and somewhat controversial – competition in the Italian market.

Utility company Enel is building out a wholesale fibre network of its own, in direct competition with the incumbent’s infrastructure. To aid it in its endeavours it acquired fibre network operator Metroweb – also a takeover target for Telecom Italia – last year.