Telecom Italia to include own fiber assets in broadband network bid

Reuters

Published Nov 15, 2019 10:48

Telecom Italia to include own fiber assets in broadband network bid

MILAN (Reuters) - Italy's biggest phone group Telecom Italia (MI:TLIT) (TIM) is asking infrastructure funds to come up with bids next week for the assets of smaller broadband rival Open Fiber that will include its own last-mile network, sources said.

The former monopoly is pressing ahead with plans to find one or more funds to help it buy out Open Fiber and create a national champion that can roll out a single broadband network to avoid duplicating investments.

Open Fiber, a wholesale-only fast broadband operator, is jointly owned by state-controlled utility Enel (MI:ENEI) and state lender CDP. CDP is also TIM's second-largest shareholder.

Sources said more than a dozen infrastructure and sovereign wealth funds had been invited to present non-binding offers for Open Fiber by Nov. 19.

"The idea is that the funds will present a valuation for Open Fiber which will take into account the last-mile fiber assets that TIM will fold into the company," a source close to one of the interested funds said.

The fund, or funds, are expected to buy around half of Open Fiber with TIM taking a stake of up to half though the structure is still under discussion, sources have said.

TIM did not respond to a request for comment.

One of the stumbling blocks to the creation of a single network has been how much Open Fiber is worth with analyst estimates fluctuating in a range of 1.5-4.0 billion euros ($1.65-$4.4 billion).

TIM's last-mile network - the bit that goes from the street to homes - has traditionally been copper but since 2016 it has been rolling out a fiber-to-the-home network through Flash Fiber, a joint venture with rival Fastweb

"What's clear is that TIM needs to bring its clients into play if any fast-fiber plan is to get over the line," the source said.

Rome has long been pushing for an all-fiber optic network with some state oversight to boost productivity across a country which has one of the lowest take-ups of fixed broadband in Europe.

TIM, which has net debt of 24 billion euros, owns a large part of Italy’s wholesale market and has more than half the retail market.

TIM CEO Luigi Gubitosi recently said only 20-25% of TIM's ultra-broadband capacity was used by consumers and only 10-15% of Open Fiber's, raising questions over returns on investments.