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New TIM, CDP deal lets others into Italy single network plan

TIM, Cassa Depositi e Prestiti (CDP) and the various other stakeholders in the Italian single network project have signed an addendum to their five-month-old MoU which both amends it and removes the exclusivity clause.

In a nutshell, that means the way is open for others to get in on the single network act. Realistically though, there are unlikely to be many takers.

TIM issued a pretty terse statement on the matter over the weekend, with nothing in the way of comment. It noted that itself, CDP’s CDP Equity, KKR-controlled Teemco Bidco, Macquarie Asset Management, and Open Fiber have signed an amendment to May’s memorandum of understanding, “extending its effectiveness to 30 November 2022, except for the exclusivity obligations which cease to apply from 31 October next.”

As Italian publication La Corriere della Sera’s L’Economia notes, the removal of exclusivity is more of a formality than a point of any substance; it’s something Vivendi was pushing for. An alternative proposal to that of CDP could come, that would also take into account the government’s desire to have a publicly-controlled national infrastructure, but it seems there is noone knocking on the door at present.

A delay in the project was inevitable. CDP was expected to lodge a binding offer for TIM’s fixed network assets with a view to merging them with Open Fiber’s infrastructure – CDP being a shareholder in both, of course – over the summer. There are doubtless a number of issues behind the bank’s foot-dragging, valuation being a key one, but the headline stumbling block became the Italian elections, which took place a month ago. As expected, Giorgia Meloni’s far right Fratelli d’Italia party emerged on top. The new PM is behind the single network plan, albeit with her own ideas on how it should pan out, but we haven’t heard much from the government on the matter as yet.

And, while there is clearly much for the various stakeholders to thrash out within Italy, they also have broader interests to satisfy.

Late last week Reuters reported that the European Union’s antitrust authorities will likely require asset sales before they green light any network merger.

The newswire cited unnamed sources close to the matter as saying that certain EU officials have told their Italian counterparts that the single network deal would only be approved if the merged entity were to sell off parts of their fibre networks where they overlap in high-demand areas.

Specifically, the EU wants to maintain current levels of infrastructure competition in between 10 and 20 large and medium-sized cities, they said.

That makes sense, and doubtless TIM, CDP et al saw it coming. But it is nonetheless another fairly merger hurdle to be cleared before the single network project can come to fruition. Once again, it’s clear that there will not be a single fibre network in Italy any time soon.

As it stands, the parties have not formally notified Brussels of the proposed deal, a European Commission spokesperson said. That is understandable, given that the deal has yet to be thrashed out. However, Reuters notes that the companies have held informal talks with the EU in recent months.

Oh to be a fly on the wall…

 

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