Italy's new government of national unity, led by prime minister Mario Draghi, has reportedly rejigged the country's recovery and resilience plan (RRP) and allocated more money to "ultrafast" infrastructure.

Italy had already submitted its RRP to the European Union (EU), which entitles it to some €206 billion (US$246 billion) from the EU's COVID-19 recovery fund of around €750 billion ($897 billion).

But the RRP has been a source of political tension, and Draghi’s government – installed in February – seems likely to have been influenced by recommendations made by ex-Vodafone chief Vittorio Colao, who was recently handed ministerial responsibility for technological innovation and digital transition.

Figure 1: Fiber boost: Broadband infrastructure will benefit from Italy's reallocation of coronavirus funds.
(Source: Unsplash)

According to unnamed sources cited by Reuters, Italy is upping the amount of fund money allocated to broadband, 5G and satellite infrastructure from €4.2 billion ($5 billion) – decided by the previous government – to €6.7 billion ($8 billion).

The move boosts total funding for digital transformation projects to around €49 billion ($59 billion), up from €46.3 billion ($55 billion). A Reuters source said the increase included investments in public administration and grants for small- and medium-sized companies.

More twists and turns than a bowl of spaghetti

The RRP increase in broadband spending comes against a backdrop of uncertainty about Italy's plan for a single national broadband provider as a way to reduce expenditure on infrastructure.

Reuters suggests the Draghi-led government is looking for alternatives to the long-mooted idea of merging the fixed-line assets of Telecom Italia (TIM) with wholesale broadband operator Open Fiber (Open Fiber is jointly owned by Italian utility Enel and state lender Cassa Depositi e Prestiti).

TIM has always maintained that it would want at least a 50% stake in such an entity, which may prove difficult from a regulatory point view.

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Some progress has been made with rubber-stamping the ownership of FiberCop, however.

Earlier this month, TIM announced completion of shareholder agreements with KKR Infrastructure and Swisscom-owned Fastweb, meaning that KKR has acquired a 37.5% stake in FiberCop at a value of around €1.8 billion ($2.1 billion).

Fastweb has also transferred its 20% stake in FlashFiber, its joint venture with TIM (which holds an 80% stake), into FiberCop and taken a 4.5% stake. FiberCop now combines TIM's secondary network (from the street cabinet to customers' homes) and the fiber network developed by FlashFiber.

One potential fly in the ointment is an ongoing investigation by Italy's competition authority Autorità Garante della Concorrenza e del Mercato (AGCM), which said in December it would investigate agreements around creating the FiberCop network, and supply agreements with Fastweb and Tiscali.

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— Ken Wieland, contributing editor, special to Light Reading