By Elvira Pollina and Stephen Jewkes
MILAN (Reuters) – A war of words between Telecom Italia
TIM has been in talks for months over a merger of its fibre network assets with those of Open Fiber, controlled by utility Enel
But differences over a series of issues, including governance and regulation, have so far thwarted efforts to clinch a deal.
Replying to questions from investors ahead of a shareholder meeting this week, TIM said that any single broadband network should be controlled by a vertically-integrated player since wholesale-only models had been a failure wherever tried.
Italy’s biggest phone group, itself partly owned by CDP, is vertically-integrated with its own retail arm while Open Fiber is a wholesale-only venture that offers different operators access under the same conditions.
In a statement on Tuesday, Open Fiber said that new EU regulations and Italy’s communications watchdog pointed to wholesale-only as being the best model for funding investments for a new superfast network.
“Investments which, in contrast, have not been made by the vertically-integrated operator, causing the delay our country now finds itself in,” Open Fiber said in a statement.
Rome is keen to create a single broadband player by merging the Telecom Italia’s network with that of Open Fiber to avoid duplication of investment.
TIM Chief Executive Luigi Gubitosi has always said that a tie-up with Open Fiber is the most efficient solution to provide Italy with the modern broadband infrastructure the government desires. But TIM has also made clear that it does not want to give up control of the network itself.
“We’re ready to talk to the government and (watchdog) AGCOM about regulated models like RAB (regulated asset base) provided that value for our shareholders is safeguarded,” TIM said on Tuesday.
Open Fiber said it had connected 8.5 million households to its fibre network in about three years, making it Europe’s third-biggest supplier of fibre-to-the-home connectivity.
“(That is) a result far from a failure, judging by the uncompetitive methods used by the incumbent to obstruct it and the renewed interest shown in taking control of it,” Open Fiber said.
Sources have previously said that TIM’s biggest shareholder, French media group Vivendi
U.S. investment fund Elliott recently cut its stake in the TIM to 6.97% from 9.72%.
(Reporting by Elvira Pollina and Stephen Jewkes; Writing by Agnieszka Flak; Editing by Louise Heavens and David Goodman)
