Noovle sounds like it should be one of those processed foods that have taken off among people who think cooking is beneath them. The unappetisingly named Huel and Soylent are the best known of today's crop. The first surprise, then, is that it's a cloud company, not a cloudy bowl of mush. The second, after you've goggled at those vowels and mouthed the name through pursed lips a few times, is that it's not a part of Google.

Since May last year, Noovle has been owned by Telecom Italia, and morphed into something quite different. When Italy's biggest telecom operator bought the firm for an undisclosed fee (which probably means at a snip) it was "an ICT consultancy and system integration company." In that guise, it was also an important Italian partner of Google Cloud, the Internet giant's cloud-computing division. After eight months of the Telecom Italia treatment, Noovle this week became "the biggest cloud project for Italy." Che favoloso.

Telecom Italia has not just snapped its fingers and turned a mouse into an elephant, and here, in fact, is where Google assumes an even bigger role in the story. Back in late 2019, spotting an untapped local opportunity, the Italians sought out the Internet company for its expertise in all things to do with the cloud. The idea was to turn a part of Telecom Italia that generated annual sales of just €250 million ($304 million) into a €1 billion ($1.2 billion) business.

As part of this transformation, Google Cloud entered Telecom Italia's facilities alongside Nuvola Italiana, the operator's existing cloud-computing service. Google also took responsibility for training about 800 Telecom Italia engineers to provide systems integration and professional services. Telecom Italia even dangled the prospect of introducing Google Cloud into new "edge" data centers. Using locations that were closer to customers would cut journey times for data signals (latency) and make new services a possibility.

Several months later, this entire data center business was hived off. Labelled "Newco" in Telecom Italia's financial reports, it was on course to make about €500 million ($609 million) in revenues for the 2020 fiscal year and forecasting future sales growth of 20% annually. The new-look Noovle, announced to the world this week, is a concoction made by sprinkling some of the old Noovle's expertise over Telecom Italia's assets – and then injecting a massive dollop of Google.

Some of the details are hazy, and even appear to contradict earlier statements. When Telecom Italia first announced its Google tie-up, it claimed to have 22 existing data centers. The number is down to 17 in the latest press release. Only 11, moreover, seem to be operational, with Noovle given the task of building six new ones that can support the full menu of public and hybrid cloud services.

Public cloud dominance

Whatever the current figure, this is clearly one of the fastest-growing parts of Telecom Italia, whose total revenues fell 17.5% year-on-year in the first nine months of 2020, to about €11.8 billion ($14.4 billion). If all goes to plan, Noovle will generate about €1 billion in annual sales and €400 million ($487 million) in underlying profits by 2024.

CEO Luigi Gubitosi could not have timed the move better if he had owned a crystal ball that provided a forewarning of the COVID-19 pandemic. Lockdowns in Italy and elsewhere have nourished the public cloud just as they have starved most other businesses. AWS, Microsoft Azure, Google Cloud and Alibaba, the world's four largest public cloud providers, grew revenues by 40% in the third quarter of 2020, according to Canalys, a market-research firm.

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Given the valuations attached to the public cloud providers, Noovle could be worth even more than Telecom Italia, whose market capitalization is a measly €7.9 billion ($9.6 billion) today and has been on a downward trajectory for the last five years. Selling a stake in Noovle, then, would probably raise a substantial amount for a steadily shrinking business burdened by debt – potentially more than Telecom Italia has been able to make by selling assets such as towers.

For Google and its rivals, similar tie-ups with Europe's other telecom incumbents could look very attractive this year. The region's consumers and businesses are likely to become even more dependent on cloud services as people are perpetually sealed inside the quarantine zones of their own properties, guaranteed a virus-free albeit potentially miserable existence. As politicians grumble about the might of the Internet giants, the conditions for a full public-cloud takeover could hardly be better.

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— Iain Morris, International Editor, Light Reading