The European Commission would have likely blocked it – and it was probably not a good idea anyway
Speculations on the merger could now be over: The Italian Government is reportedly backing down on plans to create a single fibre network, resulting from the merger of TIM and the wholesale-only operator OpenFiber (OF). The possibility of combining the two networks became serious in August 2020, when TIM spun off its secondary fixed access network into a separate company ‘FiberCop’ of which it retained control. The move was considered as the first step to the creation of an ‘AccessCo’ including both networks, which should have been finalised by Q1 this year. This week, rumours of an imminent breakthrough emerged again as energy provider Enel sold its 50% stake in OF, allowing the Government to increase its presence to 60% while ceding the remaining 40% to the Macquarie Group.
Regulatory hurdles are likely to have put an end to it: While the European Commission did not formally examine the transaction, it is understood that the EC had concerns that the merger would have rolled back two decades of deregulation in the telecoms sector. Commissioner Vestager also noted that a merger resulting in a vertically integrated operator would have been problematic. TIM’s proposal would have created just that, since the operator aimed to retain at least 50.1% of AccessCo, despite proposing some safeguards to guarantee independent and shared governance with the Government.
It was probably not a good idea anyway: Fibre deployment in Italy has been lagging, despite a promising start after the broadband strategy set by the Government in 2015. FTTH coverage stood at 30% of households according to the EC’s DESI index in 2020. Policymakers have portrayed the single network as the solution to boost the availability of gigabit-capable broadband, though it is unlikely that it would have solved the problem. There are no similar setups elsewhere in Europe, and the countries where fibre deployment has grown faster are characterised by competition between infrastructures (e.g. Spain and Portugal). The closest example would have been the Australian NBN, with the important difference being that the NBN is not a vertically integrated entity. The delays faced by the NBN in completing its rollout over the years, and the difficulties in achieving efficient price outcomes should probably have warned off Italy and others from adopting a similar approach.
Source: https://www.bnnbloomberg.ca/italy-to-drop-backing-of-telecom-italia-single-network-1.1599957
