news


Imminent TIM and Open Fiber deal revives hopes of single Italian network

TIM

TIM is set to allow Open Fiber to use its ducts and poles to extend fibre broadband to unserved areas of Italy.

Reports of talks between the pair, and a deal that could be announced at the start of next week, come as the proposed single Italian network plan hangs in the balance and debate continues over KKR’s bid for TIM. All these elements are intrinsically linked, making for some interesting times in the Italian telecoms market.

Italian daily Il Messagero appears to be the original source for the TIM/Open Fiber rumour, with a number of newswires and telecoms publication Mondo Mobile Web citing the print edition of the paper.

While some are referring to the pending deal as a network-sharing arrangement, it seems to be more of a commercial transaction than that choice of words suggests. Open Fiber will pay for access to TIM’s infrastructure – specifically pylons, poles and cable ducts – to enable it to roll out fibre to Italy’s white areas, that is, places with no fibre broadband provider.

Such a deal between the incumbent and a major rival is noteworthy in and of itself, given the race to provide fibre coverage in Europe at present. But perhaps more pertinently, it is being viewed in Italy as a sign of a thawing of relations between TIM and Open Fiber. The fact that the deal is set to be inked on 14 February, which happens to be Valentine’s Day, is probably a coincidence, but nonetheless, it could turn out to be the first step towards a marriage of infrastructure between TIM and Open Fiber.

Italy was all for a single network for high-speed broadband, merging TIM’s fibre assets with those Open Fiber, and appeared to have persuaded the relevant parties that such a move made sense. But a change of government last year brought a change of stance, and now the plan is in doubt. As it stands, the Mario Draghi government is still examining it options.

Meanwhile, TIM’s new CEO Pietro Labriola has been given the go-ahead by the company’s board to examine the possibility of a network spin-off – officially with a view to controlling costs and exploring new services – a move that could help pave the way for an infrastructure tie-up, as well as possibly holding off KKR’s advances.

The private equity firm made a €10.8 billion offer for TIM, network assets and all, late last year. The bid is naturally the source of much debate in Italy for strategic reasons and, as Bloomberg reports, is now being viewed as undervaluing the telco.

According to unnamed sources cited by the newswire, state-owned lender Cassa Depositi e Prestiti (CDP), which holds a 10% stake in TIM – and 60% of Open Fiber, incidentally – values its stake in the telco at €0.82 per share and would be unwilling to accept KKR’s offer of 50.5 cents per share. With major shareholder Vivendi, with 23.75% of TIM’s shares, also believing the KKR offer undervalues the telco, the deal looks set to fail. However, Bloomberg has previously noted that KKR would consider going to to €0.70-€0.80 to secure TIM, which is getting much closer to CDP’s valuation.

Nonetheless, the single network plan is once again looking to be a more likely outcome. And it could well be that a commercial deal between TIM and Open Fiber next week will be the first of several that will bring that plan about.

 

Tags: ,

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Polls

Do you agree public funding should be used to support mobile operators to more broadly deploy Open RAN?

Loading ... Loading ...