Italy to spend €1.5 billion helping telcos

Lots of various Euro cash notes covering the photo.

The Italian government is working on what is effectively an aid plan worth more than €1.5 billion to help national telecoms operators, it emerged this week.

A draft decree outlines the details of the plan, which mainly seems to involve giving telecoms operators tax breaks over the next few years, with some cash also going towards the upgrade of copper networks to fibre and early retirement funds, Reuters reported, having had sight of the draft document.

The whole thing appears to be carefully constructed so as to avoid contravening European Union regulations on state aid. Indeed, the newswire notes that the tax relief portion of the deal applies to firms deemed to be of strategic national importance for exactly that reason; giving breaks to telcos only would not pass muster in Brussels.

The country’s industry ministry – that’s the Ministry of Enterprises and Made in Italy – proposes to cut the levies on energy bills for the aforementioned companies of strategic importance, including telecoms companies, for a three-year period through 2025, the draft shows. It is also considering extending an existing tax break for energy-intensive companies to those same strategic firms. Those two tax break schemes will together cost €1.2 billion. Presuming they get the go-ahead from the European Commission, that is.

The draft also covers the allocation of €200 million to support telcos upgrading their copper lines to fibre-to-the-premises (FTTP), although we have no further information on how that would be distributed. As Reuters rightly points out, this portion of the aid package mainly benefits TIM, which still has plenty of copper in the ground.

Due to the size of its workforce, the incumbent is also likely to benefit the most from the final element of the deal, a €145 million spend on early retirement plans, designed to help telcos hire younger workers. Presumably that will be doled out in such a way as to ensure that it isn’t just about reducing staffing levels, which is something of a hot button issue in Italian telecoms at present, the unions having expressed strong opposition to the various structural separation endeavours taking place mainly from the perspective of the sustainability of employment.

There has been no official comment from the ministry, and as yet there are no published documents about the plan. Doubtless the government is hoping to move pretty quickly, given the state of play in the Italian telecoms space, but it will have to wait for the European Commission to have its say, and that could take some time.

Most, if not all, of Italy’s telecoms players could do with a shot in the arm, but they are unlikely to find themselves on the receiving end of a pile of cash in the very near future.

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