The national telecom provider and the Italian state investment agency have agreed to combine networks.
Telecom Italia (TIM) and Italian state investor CDP have signed a preliminary agreement to combine the phone group’s fixed network assets with those of state-owned broadband rival Open Fiber, according to reporting from Reuters.
The move, which has been in the making for some time, aims to pave the way for the creation of a unified ultra-fast broadband network across Italy. This will happen while the new TIM CEO Pietro Labriola works on a turnaround plan for the group that focuses on a full-blown split of its landline grid from service operations.
The preliminary agreement was also signed by infrastructure funds Macquarie and KKR, which hold minority stakes, respectively, in Open Fiber and in TIM’s last-mile network unit.
KKR came round to joining the TIM-CDP project after former Italian phone monopoly TIM spurned a 10.8 billion euro ($12 billion) proposal by the U.S. fund to gain control of TIM and delist it before splitting its fixed and services assets.
Deal will help Italy accelerate digitalisation on a national scale
CDP, which is TIM’s second-largest investor with a 10% stake and owns 60% of Open Fiber, will control the combined network entity, TIM and CDP said, adding that the parties aim to negotiate a binding deal by the end of October.
The news helped shares in TIM rise 4% in early trade as Italy’s blue-chip index gained 0.6%.
Any binding agreement will be subject to the approval of national and EU antitrust authorities. TIM’s shareholders will also have to vote on the deal.
Italy is keen to create a single broadband network champion to avoid duplicating investments and to speed up a fibre optic roll-out and digitalisation of its economy.
Options being discussed for the final structure of the deal with Open Fiber include also an outright sale of TIM’s fixed network, sources have said. The new network entity will take up a significant portion of TIM’s debt and domestic staff.