TIM buys into national Italian broadband plan

• To sell a slice of its new fixed access network unit, FiberCop, to KKR
• FiberCop to be merged with Open Fiber to form AccessCo
• TIM to own at least 50.1% of AccessCo
• Can Italy make a single fixed access model work?

TIM (Telecom Italia) has paved the way for the creation of a single national fixed access network in Italy by rubber-stamping a deal to sell a slice of its access network unit to private equity firm KKR, and then ultimately merging that unit with alternative wholesale network operator Open Fiber to create a new wholesale national entity called AccessCo.

TIM will sell a 37.5% stake in FiberCop, the name of its newly-created fixed access unit that already reaches 85% of the Italian population with FTTx-based services, to KKR Infrastructure for €1.8 billion: TIM will retain a 58% stake, while FastWeb will hold a 4.5% stake. 

FiberCop, which will offer passive wholesale network services to any retail ISP, will continue to build out its network across Italy and allow other operators to co-invest: An agreement has also been struck with Tiscali to this effect.  

TIM’s board of directors has also given the go-ahead for a merger between FiberCop and Open Fiber to form AccessCo, in which TIM would hold a stake of at least 50.1% but which, because of a “shared governance mechanism” with Italian state lender CDP Equity, would act as an independent operation. Open Fiber is jointly run and funded by state-controlled utility company Enel and CDP.

The full details of the transactions and ownership structure can be found in this TIM announcement.

The big question now, of course, is whether this move will prove beneficial for Italian broadband users, as while it concentrates fixed access investments into a single vehicle that, in theory, can provide 100% coverage at a faster pace, it also removes the catalyst of infrastructure competition that often spurs innovation and customer-friendly pricing. 

Single national infrastructure plans don’t always work out for the best: Australia’s efforts to develop and build a national broadband network, now up and running as nbn, have been hampered over the years by political pressures, wavering strategies, broadband inequality and widespread dissatisfaction with the resulting services; by contrast, New Zealand’s Ultra-Fast Broadband (UFB) rollout has been a comparative success. (See Newsflash: National broadband schemes can deliver what they set out to do.)

So will Italy follow in the footsteps of Australia or New Zealand? The outcome will largely be determined by whether there is broad political support for the scheme, whether FiberCop and Open Fiber can play nicely together, and whether the Italian regulator is given enough powers to ensure that the retail ISP operations and their customers aren’t let down by what will effectively be a national infrastructure monopoly. In football (soccer), that would be classed as “a big ask.” 

Auguri, Italia!

- Ray Le Maistre, Editorial Director, TelecomTV