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TIT - Telecom Italia SpA News Story

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Sector
Telecoms
Size
Large Cap
Market Cap £5.58bn
Enterprise Value £29.78bn
Revenue £13.44bn
Position in Universe 55th / 725

FACTBOX-Italy's superfast broadband roll-out: the issues

Thu 6th May, 2021 4:27pm
MILAN, May 6 (Reuters) - Italy wants to speed up the
roll-out of all-fibre ultrafast broadband coverage to boost
productivity and close a gap with major European rivals.
    Italy's new government under Prime Minister Mario Draghi has
put digitisation at the centre of its agenda. It plans to spend
more than 8 billion euros ($9.6 billion) of EU funds on
broadband, 5G and satellite technologies and wants superfast
connections of 1 gigabyte available for all Italians by 2026.
    Rome has yet to decide if it plans to pursue a long-standing
project of a single broadband network or find alternative ways
to boost connectivity, with several ministers holding different
positions on the issue.  urn:newsml:reuters.com:*:nL8N2MT2XW
    
    ITALY'S BROADBAND CONNECTIVITY & USAGE: 
    Italy is the European Union's third-largest economy, but
comes second to last among 27 EU members in Internet usage,
latest EU data show. Almost a fifth (17%) of Italians have never
used the web and only 13% of households subscribe to superfast
broadband connections of at least 100 megabytes.
    Coverage with connections of at least 30 megabytes has
increased significantly in recent years, with Italy now in line
with the EU average. But it is 22nd among 27 EU states for the
roll-out of superfast broadband.
    
    MAIN ACTORS:
    * Telecom Italia  TLIT.MI  (TIM): Italy's biggest phone
group owns almost all of Italy's wholesale market. Until
recently, the former state phone monopoly was reluctant to
upgrade its copper lines to fibre, saying demand did not justify
investments.
    It recently created FiberCop to upgrade its 'last mile'
grid, mainly made of copper, connecting street cabinets to
homes. U.S. infrastructure fund KKR  KKR.N  owns 37.5% of
FiberCop, while Swisscom's  SCMN.S  Fastweb holds 4.5%.
    * Open Fiber (OF): The wholesale-only broadband operator,
jointly owned by state lender Cassa Depositi e Prestiti (CDP)
and utility Enel  ENEI.MI , was set up in 2016 to speed up fibre
rollout across Italy. CDP recently agreed to raise its stake to
60% to take control, while infrastructure fund Macquarie struck
an accord to buy out Enel's remaining 40%. 
    * CDP has also become TIM's second-largest shareholder to
oversee Rome's interest in a sector seen as strategic.
    
    THE SINGLE NETWORK PROJECT: 
    In 2020, CDP and TIM signed a preliminary agreement to merge
TIM's fixed assets with those of Open Fiber, to create a unified
network operator, AccessCo, with near-monopoly for broadband
rollout but open to other players. Economy Minister Daniele
Franco backs the single network plan but is urging a unified
government position, sources said.
    Governance remains the biggest hurdle to getting AccessCo
off the ground, with TIM - backed by top shareholder Vivendi
 VIV.PA  - wanting more than 50% of any company created from a
combination with OF. 
    European regulators, who say any project receiving EU funds
should guarantee competition, favour Italy developing a fibre
network based on a wholesale and co-investment model and not one
controlled by vertically-integrated players such as TIM.
    
    ALTERNATIVE MERGER: 
    Industry Minister Giancarlo Giorgetti is ready to back a
less ambitious plan to merge OF with FiberCop, which includes
only TIM's secondary network. TIM would keep its primary network
- connecting switching centres to main street cabinets - and
would not have a majority stake.

    TELCO CONSORTIUM: 
    Italy's ruling parties are also discussing a plan to
agglomerate all the country's telecom operators in a consortium
to accelerate fibre rollout, a document seen by Reuters showed
 urn:newsml:reuters.com:*:nL8N2ME4D7
    
    PARALLEL NETWORKS: 
    TIM and OF could continue developing networks in parallel,
especially as competition eases regulatory concerns, but there
are worries around duplication of infrastructure and spending.
 urn:newsml:reuters.com:*:nL1N2M90O6
    Former Vodafone CEO Vittorio Colao, picked by Draghi to
speed up coverage rollout, says competition has a role to play
and favours speedy rollout using the best technologies
available, including Fixed Wireless Access (FWA) systems that
combine fibre with mobile technologies.
($1 = 0.8301 euros)

 (Reporting by Agnieszka Flak, Elvira Pollina, Giuseppe Fonte
and Stephen Jewkes
Editing by Keith Wei)
 ((agnieszka.flak@thomsonreuters.com; +39 02 6612 9450; Reuters
Messaging: agnieszka.flak.thomsonreuters.com@reuters.net))
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