01 Sep Telecom Italia on track to create single fiber network | Light Reading
It’s had more twists and turns than an Italian opera plot, but Telecom Italia’s plan to create a single fiber network in Italy through an integration with Open Fiber finally gained real traction this week.
The matter is far from straightforward, and it involves the completion of a number of separate processes.
Telecom Italia announced that its board of directors has approved the sale of a 37.5% stake in a new entity called FiberCop to US private equity group KKR for 1.8 billion (US$2.15 billion), after delaying the decision earlier in August at the government’s request.
FiberCop will incorporate Telecom Italia’s secondary network, the dumb physical infrastructure that hosts the operator’s copper and fiber networks the ducts, sockets and other such property.
Fastweb, an Italian broadband operator, will also hold a 4.5% in the new company after FlashFiber, a joint venture between Telecom Italia and Fastweb, is incorporated into FiberCop.
An important factor for Telecom Italia is that it will retain a majority 58% stake in FiberCop. The operator hailed the deal as the first step in a “turning point” for Italy’s telecommunications system and said the project would be “open” to different players.
The former Italian incumbent has already signed a Memorandum of Understanding with Tiscali that will see the latter operator participate in the FiberCop co-investment plan.
Squaring the circle with Open Fiber deal
On August 4, the Italian government asked Telecom Italia to postpone the decision on KKR’s offer to allow time to agree on a merger deal with wholesale provider Open Fiber, which is jointly run by state-controlled utility Enel and state lender Cassa Depositi e Prestiti (CDP).
Discussions on a merger with Open Fiber have been rumbling on for some time, but disagreements over the terms of a deal have hindered progress.
On Monday, the Telecom Italia board and CDP finally agreed to merge FiberCop and Open Fiber into a new company called AccessCo. Under the terms of the agreement, Telecom Italia will own at least 50.1% of AccessCo, which will incorporate its secondary and primary networks as well as Open Fiber.
Importantly, it was stressed that the “independence and third-party status” of the new company will be guaranteed by a shared governance mechanism with CPD Equity. CPD said AccessCo would be open to other investors.
The primary aim of this somewhat complicated meshing together of Italian networks is to speed up the deployment of fiber-to-the-home (FTTH) infrastructure across Italy and offer passive access services of the secondary copper and fiber networks to all operators.
The current objective is to cover 56% of all properties with a FTTH network by 2025, avoiding the duplication of existing efforts by FlashFiber and Open Fiber.
CPD also said it will start discussions with Telecom Italia on other areas of possible cooperation, including 5G, edge computing, data centers, cloud and more.
State of independence
Telecom Italia’s rivals have naturally been keeping a close eye on proceedings. Sky Italia, Vodafone Italy and Wind Tre have all formed wholesale access deals with Open Fiber and are keen to ensure that the creation of a single national network “guarantees a competitive, transparent and neutral market.”
The CEOs of the three operators met with ministers and the head of CPD last week and were given the opportunity to present their views on the project. On the whole, they appear to be cautiously optimistic, but stressed that the agreements under discussion “are only the starting point.” The strategic and operational independence of the new company, they said, is the “crucial factor” for a rapid and widespread development of a fast fiber network throughout Italy.
Anne Morris, contributing editor, Light Reading