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Italy falters again on 5G funding

The Italian government has opened a tender for more than €500 million worth of funding for the provision of 5G connectivity to areas without high-speed mobile coverage.

That seems like a positive step, until you consider that this tender is essentially a re-issue after a previous attempt to allocate cash for 5G in problem areas failed to draw any interest. This time around the state has changed the parameters, including reducing the total sum available to €567 million from the €974 million it tried to give away in March, as well as lowering the number of areas to be covered.

So, it’s back to the calculators for Italy’s telcos as they seek to work out if the sums stack up this time.

This project, which looks to extend 5G networks to areas that would otherwise be uneconomic to cover, forms part of Italy’s much-discussed post-Covid National Recovery and Resilience Plan, which in Italian shortens to PNRR. In total, the PNRR has €191.5 billion in EU funding available to it, as well as some tens of billions of additional funding set out by the Italian government, but the telecoms space will only suck up a portion of that.

In all, Italy aims to hand out €6.7 billion to fund broadband infrastructure, including fixed networks, satellite and 5G, and more than half of that figure is taken up by the Italy 1 Giga project that was launched in January, just days after the country failed to attract any interest to a much smaller tender for the connectivity in its minor islands. We questioned back then whether the conditions of these tenders are conducive to drawing in the telcos, and it now appears that there are still problems on that score.

Italy’s 5G initiative, which also takes up a fair chunk of the overall broadband infrastructure spend, is split into two halves; one covers mobile network infrastructure and the other fibring up the base stations. Together the scheme is – or rather, was – worth the best part of €2 billion. The Ministry for Technological Innovation and Digital Transition (MITD), headed by minister Vittorio Colao, received bids for all the available lots in the fibre portion, but none at all in the mobile network portion by its 9 May deadline, Italian financial daily Il Sole 24 Ore reported just over a week ago.

The telcos abandoned the idea of participating in the tender after carrying out financial modelling, the paper explained. It would have been “too demanding” to cover mainly peripheral areas of the country, while generating sufficient revenue and profits to balance costs as well as meeting the obligation to open up the infrastructure on a wholesale basis, it said.

It’s not clear whether any obligations have changed with the re-issue of the tender – it has to comply with EU regulations, after all – but the state has certainly retained the 90% limit; that is, the funding can cover up to 90% of operators’ total costs. However, the scope of the tender has changed. There are still six regional lots, but each now covers fewer locations.

The telcos have until 10 June to submit their applications. We’re likely to know later that month whether any of them chose to do so.

 

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