Italian government considering new cap on broadband contracts

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Italian telecoms regulator AgCom introduces new rules in a bid to break up oligopolies in the country’s broadband market.

Italy is set to invest almost 7 billion euros in ultra-fast connectivity, and Innovation Minister Vittorio Colao has considered the move. He hopes it will promote competition as Rome prepares for deployment.

One option under discussion has a 50% cap, meaning one bidder could not secure more than half of the single-provider areas – known as “grey areas.”

The scheme is not final yet, and it remains unclear what percentage will be allocated for bidding. This U-turn is in line with former Vodafone CEO Mauro Moretti’s commitment to protecting competition.

What’s the significance of the plan?

The new plan would mark the end of Telecom Italia’s proposed merger between their fixed-line network and Open Fiber. This merger had already garnered stark opposition in fear of increasing prices or worse service solely because they’re now more consolidated than ever before.

The KKR (the investor behind it) deal is the single largest ever made for a European last-mile network. The company behind it all may be TIM, but they have some high expectations to meet. The U.S.-based private equity firm has committed 1 billion euros towards their 37.5% stake, making it one of Europe’s biggest purchases so far.

TIM has received a 10.8 billion euro non-binding cash proposal from the company from KKR, which sources have said aims to protect its investment in TIM’s grid system. Additionally, the Italian government is speeding up broadband rollout without harming competition by introducing a measure this month. It requires operators to work in the same area and request permits together.