Italian Colao welcomes single network agreement if competition is preserved


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CERNOBBIO – Italy wants a stronger national telecommunications network, Innovation Minister Vittorio Colao said on Saturday, adding that this could be achieved by merging the assets of Telecom Italia (TIM) and Open Fiber as long as competition in the sector is maintained.

“What is important to us is a national telecommunications infrastructure that guarantees high performance and quality,” Colao told reporters on the sidelines of the Ambrosetti business forum.

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“If this were to happen by combining parts of Telecom (Italia) with Open Fiber, it is welcome as long as competition is preserved,” added Colao.

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A former head of Britain’s Vodafone, Colao said he was worried about the industry in Italy and Europe as return on investment and capacity for innovation had fallen in recent years.

Italy’s broadband performance lags that of many other countries in the European Union (EU).

Colao confirmed that Italy, along with Spain and France, have asked the European Commission to propose legislation ensuring that Big Tech companies partially finance telecommunications infrastructure in the bloc, as reported by Reuters last month.

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Local consolidation in a fragmented market could be a way to shore up the industry, but it must be done while preserving competition, Colao said.

Italy’s state-owned lender CDP, which controls Open Fiber, in May signed a preliminary agreement with TIM to create a unified, state-owned wholesale network operator by merging TIM’s fixed network infrastructure with that of Open Fiber.

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CDP is preparing to make a non-binding offer for Telecom Italia’s landline network this month as it pushes ahead with plans to create a single national network champion, two people familiar with the matter said.

The CDP is expected to submit its preliminary bid for the TIM network before the September 25 general election, the sources said, warning that deliberations were still ongoing.

Under a program still under discussion, Open Fiber would be used as a vehicle to buy out TIM’s home network and international cable unit Sparkle, they added.

The valuation is a key issue in the long-running project, sponsored by the outgoing Italian government led by Prime Minister Mario Draghi.

CDP’s initial valuation for TIM’s network assets would not go well beyond 20 billion euros ($19.9 billion), the sources said, warning that the valuation was still ongoing. .

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TIM’s main investor, French media conglomerate Vivendi, has warned that it will not support any deal to split the former telephone monopoly from its fixed network infrastructure for less than 31 billion euros.

Divesting from its fixed network infrastructure would give TIM new resources to reduce its debt and focus on its service operations, under a business plan drafted by TIM CEO Pietro Labriola.

However, existing plans for TIM have drawn criticism from the Brothers of Italy, the right-wing party leading the polls ahead of the vote, who have called on the CDP to suspend the process until a new government is in place.

Alessio Butti, the party’s telecommunications policy officer, called for a renationalisation of TIM and called on the former telephone monopoly to retain control of the network in any combination with Open Fiber while splitting from its domestic service operations and its listed Brazilian unit. ($1 = 1.0049 euros) (Report by Elvira Pollina Editing by Keith Weir)

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