Ex-Vodafone boss Colao backs Italy’s single network, with caveat

After a hectic few months of announcements, speculation and political upheaval, Telecom Italia (TIM) has been somewhat quiet of late about its long-gestated plan to hive off its fixed network assets and potentially merge the network with rival Open Fiber to create a single fiber provider for Italy.

No doubt much is still going on behind the scenes, with updates on the next steps expected soon. Indeed, Italian state lender Cassa Depositi e Prestiti (CDP), which controls Open Fiber, is reportedly preparing to make a non-binding bid for Telecom Italia's fixed grid this month, before the country's general election on September 25.

In May, TIM signed a non-binding memorandum of understanding with CDP Equity as well as US investor KKR and Macquarie Asset Management.

Figure 1: TIM has been tight-lipped about its long-gestated plan to hive off its fixed network assets and potentially merge the network with rival Open Fiber lately.
(Source: Arcansel/Alamy Stock Photo)

The aim of the MoU was to start a process that would ultimately lead to the creation of a single fiber network operator, controlled by CDP Equity and also involving KKR and Macquarie. CDP owns 60% of Open Fiber and about 10% of TIM.

Merged interests

Meanwhile, former Vodafone CEO Vittorio Colao, who currently holds the post of Minister for Innovation and Digital Transformation in Italy, has just made a few pointed comments on the matter.

A report from Reuters cites Colao as saying: "What we're keen on is a national telecoms infrastructure ensuring great performance and quality."

However, while he noted that this could be achieved by combining parts of Telecom Italia with Open Fiber, he indicated this would only be welcome if "competition is preserved."

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For now, all eyes are on Italy's upcoming election with suggestions that a new right-leaning coalition could derail the merger plans.

According to reports, the right-wing Brothers of Italy party, leading in polls ahead of the election, wants talks to be suspended until a new government is in place. The party has said it is "totally opposed to CDP-TIM's current plan" and is thought to be in favor of TIM being re-nationalized.

At the same time, TIM's largest shareholder Vivendi is understood to be unhappy with CDP's €20 billion (US$19.9 billion) valuation of the fixed network business and is seeking a valuation of at least €31 billion.

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— Anne Morris, contributing editor, special to Light Reading