The Italian Treasury has endorsed the idea more so than ever. However, no one has yet addressed the regulatory obstacles that it presents
The Treasury calls for a merger between TIM and Open Fiber: In Italy, the prospect of a single national broadband network has been revived this week. This led to a 3% increase in the share price of Telecom Italia (TIM) on Monday, following statements made by Giovanni Gorno Tempini, president of the Cassa Depositi e Prestiti (CDP), the public investment arm of the Italian Treasury, which holds a 9.8% stake in TIM. In an interview, Gorno Tempini said there is no alternative to merging TIM’s network assets with those of Open Fiber – a wholesaler in which CDP has a 60% stake. He argued that the merger needs to happen quickly to avoid duplicating investments, and in time for the rollout of Italy’s gigabit plan which will use funds from the European Recovery Plan.
The interests of various stakeholders are aligning on the single network: While the CDP’s endorsement of the single network was expected, it has never been as explicit as it has this time. Inside TIM, there is now broad alignment around the merger, since the main stakeholder Vivendi recently accepted the possibility of the network being controlled by the state. The KKR group, which could soon take over TIM if its €10.8bn offer is accepted, is unlikely to be an obstacle to the separation of the network. In fact, Tempini welcomed private investors saying they can reduce the burden on the CDP and validate its choices. KKR is also aware that the Government wants to keep the network under Italian ownership and could use its ‘golden power’ to that effect.
No one has yet addressed the regulatory obstacles: Despite the open endorsement of the CDP, there is still no clarity as to how the regulatory obstacles to the single network would be cleared. The European Commission has repeatedly spoken against the creation of a wholesale monopolist, which would have no precedent in Europe after decades of liberalisation. In Italy, the antitrust authority AGCM is investigating the impact of FiberCop, which spun off TIM’s passive network into a company still under TIM’s control. In February, the AGCM will decide on the commitments presented by TIM, KKR, and Fastweb to mitigate the problems identified by the authority, which is worried about reduced competition both at the retail and wholesale level. In the event of a merger with Open Fiber, regulators would likely raise even more serious concerns.
