Enel OKs €2.7bn Open Fiber sale to Macquarie

Italy has taken another step towards realising its dream of having a single, nationwide fibre network.

Utility giant Enel late on Thursday gave the go-ahead to sell up to its entire 50 percent stake in FTTP unit Open Fiber to Macquarie Infrastructure and Real Assets (MIRA) for €2.65 billion. Enel is prepared to part with less than its entire holding, but at a minimum wants to offload at least 40 percent, in which case the purchase price would be €2.12 billion. The parties have set a deadline of 30 June 2021 to get the transaction across the line.

The deal comes with two earn-out clauses for Enel.

The first will be activated should Open Fiber win its €1.5 billion lawsuit against Italian incumbent TIM, which it accuses of anti-competitive behaviour in the broadband market. Under the deal with MIRA, Enel will be entitled to 75 percent of any damages.

The second earn-out will see Enel paid up to €500 million in the highly-likely event that MIRA transfers a portion of its holding in Open Fiber into FiberCop.

FiberCop is a joint venture comprising the fixed network assets of TIM and Flash Fiber, an FTTH joint venture between TIM and smaller rival Fastweb. The plan is for FiberCop to merge with Open Fiber, thereby creating AccessCo: a new telco with the scale and assets to deploy and operate a wholesale, nationwide FTTP network.

The agreement between Enel and MIRA removes one more significant barrier to the creation of AccessCo. Another hurdle was cleared in late November, when the European Commission ruled that the creation of the FiberCop joint venture does not constitute a merger, and therefore doesn’t require further regulatory scrutiny.

It is possible though that the forthcoming combination of FiberCop and Open Fiber may well constitute a merger as far as Brussels is concerned, in which case there could be a lengthy review process in order to investigate the potential consequences that AccessCo’s creation could have for Italy’s broadband market and consumers.

Meanwhile, the potential for a €2.65 billion payday for Enel will further encourage it to build wholesale fibre networks outside Italy. The company is present in 32 countries; it has 2.2 million kilometres of power lines spanning several markets in Europe and Latin America.

Last month, Enel CEO Francesco Starace told investors during his company’s capital markets day that it plans to replicate its Italian wholesale fibre rollout in other places “where we see similar or parallel situations.”

If all goes according to plan in Italy, this could have some significant consequences for fibre deployment in several major markets.