Italian tower feud could be mimicked across Europe

Swisscom AG

02/04/2026 12:07

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Jennifer Johnson

LONDON, April 2 (Reuters Breakingviews) - An Italian feud may signal the end of the cosy relationship between telecom operators and tower companies. Masts were a cash cow for telcos during the low-rate era – with Telefónica TEF.MC, Vodafone VOD.L and peers selling these assets to specialist infrastructure groups at high valuations before leasing them back. Now, Fastweb and Telecom Italia  TLIT.MI have made a radical move to unpick the long-term contracts they signed. Success could challenge the tower industry's claim to infrastructure-style certainty.

Swisscom-owned Fastweb and Telecom Italia are launching a pincer move on Infrastrutture Wireless Italiane INWT.MI (INWIT), a tower group first spun out of Italy’s former state phone monopoly in 2015. They first unveiled plans to jointly build 6,000 new towers in the country. Now, both argue that a long-standing contract to lease their current towers from INWIT can be terminated early in 2028. INWIT, which is now 30%-owned by French investor Ardian, argues the so-called master service agreement (MSA) should run till 2038.

The tenants' move looks bold. INWIT’s chief executive, Diego Galli, reckons that replacing the network would involve building at least 15,000 new towers. At an average build rate of 500 a year, it would take 30 years to fully swap out INWIT’s masts. Nor would Telecom Italia and Fastweb’s 6,000 new towers be a sufficient stand-in.

Yet the stakes are high for INWIT too. Fastweb and Telecom Italia are INWIT’s anchor tenants, accounting for 80% of its revenues. Since neither side can afford a total rupture, it’s likely that the parties eventually reach a deal that cuts the burden of the MSA, which Swisscom SCMN.S argues is above market level. That could mean, for example, INWIT agreeing not to fully pass on inflation hikes to the tenants, as is currently the case. The group’s relative underperformance versus rival Cellnex Telecom CLNX.MC suggests investors are expecting some pain.

INWIT’s fate may also matter for other tower companies across Europe, such as Cellnex and privately-held Vantage. Once one telco recuts a towers contract, others are likely to follow. Zegona Communications ZEG.L, which bought Vodafone’s Spanish unit, had considered terminating that group’s contracts with Vantage over cost concerns, according to reports.

Consolidation may weaken the tower companies' hands. Europe’s telecoms groups have been lobbying for more permissive merger rules in Brussels for years in order to shrink costs and share investment. Assuming a wave of dealmaking hits, the tower companies may have to contend with a smaller number of stronger tenants with greater bargaining power, and excess mast capacity. And if dealmaking rules don’t change, operators may be forced to explore other cost-saving alternatives. Zegona, for example, is talking with Spanish peers MasOrange and Telefónica about combining network infrastructure like antennas and base stations.

That would leave tower companies facing lower growth coupled with less predictable cashflows. The sector has enjoyed a premium rating, with INWIT trading at an average 12-month forward EV-to-EBITDA multiple of 15 times over the last five years, while Cellnex traded closer to 16 times. If Telecom Italia and Fastweb manage to walk away with a rental cut, it will show that towers are perhaps not the stable assets that investors thought.

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CONTEXT NEWS

On March 19, Telecom Italia and Swisscom, the owner of mobile operator Fastweb + Vodafone, announced plans to build up to 6,000 new mobile towers in Italy. The move was received as a direct challenge to Infrastrutture Wireless Italiane (INWIT), their current tower provider.

Two sources with knowledge of the matter told Reuters that both companies have been trying for months to negotiate the terms of their existing INWIT contracts, to no avail.

Both Swisscom and Telecom Italia subsequently gave notice to terminate their respective agreements, effective March 2028. Inwit says the notices have no legal basis and the contracts remain valid until 2038.

Tower providers command much higher valuations than mobile operators https://www.reuters.com/graphics/BRV-BRV/gkplkblnevb/chart.png

Investors turned bearish on INWIT after the spat with its tenants emerged https://www.reuters.com/graphics/BRV-BRV/gdpzakmxzvw/chart.png

(Editing by Neil Unmack; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))