Unfortunately for Telecom Italia (TIM), local media speculation about Iliad striking a broadband wholesale deal with state-backed Open Fiber was bang on the money.

The prospect of stiffer competition in Italy's already heated broadband market sent TIM's share price down by more than 2% after news broke.

The move makes sense to price-aggressive Iliad, however. It now has an opportunity to bundle fixed-line services with its fast-growing Italian mobile business. Iliad will no doubt draw upon experiences gleaned from France, where it has a presence in both mobile and fixed-line markets. (See Iliad appears unfazed by COVID-19.)

"Growing demand for fixed connectivity over the past few months has driven us to accelerate towards our debut in the fixed segment, and the agreement with Open Fiber is the first step in that direction," said Benedetto Levi, Iliad Italia's CEO.

It's not clear when Iliad Italia will launch commercial broadband services, but the Open Fiber arrangement means it's well ahead of the original plan to launch in 2024.

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Sky Italia recently unveiled its own broadband service, which no doubt focused minds. Greater demand for broadband in the wake of COVID-19 is perhaps another incentive to pick up the rollout pace.

Under its agreement with Open Fiber, which is reportedly not exclusive, Iliad will be able to offer FTTH in more than 271 Italian cities.

TIM and Open Fiber
One backdrop to Iliad's excursion into broadband is TIM's long-mooted partnership with Open Fiber.

In February, TIM gave US investment firm KKR the nod to be an exclusive partner in the operator's development of its ultra-broadband network. One interpretation of the deal, the details of which were not disclosed, was that TIM's hand might be strengthened in any negotiations with Open Fiber. (See Eurobites: Telecom Italia teams up with KKR for ultra-broadband push.)

The Italian government is keen that TIM and Open Fiber pool infrastructure resources rather than duplicate investment.

State lender Casse Depositi e Prestiti holds a 10% stake in Telecom Italia, and a 50% share in Open Fiber. The remaining equity in Open Fiber is held by energy utility Enel.

— Ken Wieland, contributing editor, special to Light Reading