Telecom Italia holds out for control of single broadband network
Reuters
Published Mar 12, 2020 07:05AM ET
Telecom Italia holds out for control of single broadband network
By Elvira Pollina and Stephen Jewkes
MILAN (Reuters) - Telecom Italia (MI:TLIT) (TIM) expects to make decisive progress this year on plans to provide Italy with ultra-fast broadband, but it will never accept a minority stake in any unified network created by a tie-up with smaller rival Open Fiber.
The Italian government sees building ultra-fast broadband as a priority and last month, as the country battled one of the world's worst coronavirus outbreaks, called on TIM and Open Fiber to reach an accord quickly.
A nationwide lockdown enforced by Rome in an effort to stem contagion has highlighted the need to accelerate the completion of the network as millions of Italian can't leave their homes and embrace smart-working.
TIM has been in talks for months over a merger with Open Fiber, controlled by utility Enel (MI:ENEI) and state lender Cassa Depositi e Prestiti (CDP).
It is also in exclusive talks with U.S. infrastructure fund KKR to invest in its own secondary last-mile network.
CEO Luigi Gubitosi said TIM would hold separate discussions with KKR and Open Fiber, leaving the door open to a "possible convergence" at the end of the process.
TIM, whose shareholders include French media giant Vivendi (PA:VIV), is looking to gradually switch its last-mile network to fiber.
Talks with Open Fiber have proved fruitless so far with Enel reluctant to part with it and questions over regulation and funding complicating matters.
"It's time for Enel to make up its mind," Gubitosi said.
"This year something must happen," he added, while ruling out giving up control of any merged network, with the possible exception of lines laid in areas where it was not economically viable.
"This is our core business and TIM is the best company to do the job," Gubitosi said.
TIM, which is partly owned by CDP, said FiberCop, which owns TIM's fiber and copper last-mile network, was worth 7.5 billion euros, including debt. It said the sale of a 40% stake to KKR would allow it to cash in around 1.8 billion euros.
Gubitosi said it was reasonable to expect an accord with KKR could be reached by the summer.
He said it was early to gauge the impact of the coronavirus outbreak on TIM's business, which has seen a spike in traffic but longer term could be affected by the economic recession which the outbreak is likely to have triggered.
"Fixed-line traffic ... has been up 70% in the last week or ten days, mostly in the north," he said.
Get The News You Want
Gubitosi said TIM's fixed-line backbone could sustain the increase and it still had "ample reserves".
Shares in TIM closed up 4% on Wednesday after the group reported healthy cash generation last year and surprised analysts with a forecast for an equity free cash flow of 4.5-5 billion euros under a new plan through 2022.
Investors also welcomed news that Telefonica (MC:TEF) and TIM were planning a joint offer to buy the mobile unit of bankrupt Brazilian carrier Oi SA.
TIM said the deal would not impact debt reduction plans at the group, with synergies generated from the first year.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.