TIM and Open Fiber pick up €3.4 billion in broadband funding

Italian telcos TIM and Open Fiber have won government funding worth a total of €3.4 billion to roll out high-speed fixed broadband to uneconomic areas of the country.

Italy’s Ministry for Technological Innovation and Digital Transition (MITD), headed up by telecoms veteran Vittorio Colao, has announced the results of its Italia 1 Giga tender, through which it offered  close to €3.7 billion in funding to telcos willing to tackle connectivity in tricky places.

The only players to show that kind of willing were the incumbent and wholesale rival – but possibly soon-to-be network partner – Open Fiber. TIM took part in the contest via a joint venture with its own FiberCop network arm. The Ministry confirmed that it received no offers from any other company, nor did it exclude any from taking part.

There were 15 geographic lots up for grabs, each with varying coverage requirements, ranging from Sardinia, where there was €356.27 million available for the provision of connectivity to nearly 664,000 addresses, to Trento and Bolzano where operators could bid for €34.48 million to cover close to 63,000 addresses.

The sums clearly didn’t stack up in Trento and Bolzano, which attracted no bids. But the other 14 each received bids from both players, with Open Fiber ultimately winning eight lots and TIM six. The telcos’ share of the cash came in at €1.83 billion for Open Fiber and €1.56 billion for TIM. Interestingly, bidders in the tender were restricted to winning a maximum of eight lots, although we don’t actually know whether this had a bearing on the result.

The outcome of the tender is something of a win for the Italian government, which has been struggling to attract telcos to its various post-Covid connectivity competitions.

Italia 1 Giga – the name is self-explanatory – is about providing high-speed fixed connectivity to underserved areas via fibre or wireless alternatives. Its goal is to get 1 Gbps connectivity to the whole country by 2026; as such, the winning bidders have until 30 June that year to complete all works linked to the tender. The plan forms part of the broadband segment of Italy’s National Recovery and Resilience Plan (PNRR); in financial terms, it accounts for just over half of the country’s planned €6.7 billion spend, backed by EU aid, to boost broadband connectivity.

Allocating funding for 14 of the 15 available lots is a big step forward compared with the much smaller minor islands tender that failed to attract any interest earlier this year and the more recent 5G portion of the plan, the second iteration of which kicked off in recent days after the first failed to draw any bidders. As an aside, the second run at the minor islands tender saw €45.6 million in funding awarded to Elettra, a submarine systems company owned by Orange.

In both cases, the onerous conditions imposed on the funding, including coverage requirements, plus the telcos’ inability to make the numbers stack up, contributed to the failures. The maths clearly looks a lot more favourable with Italia 1 Giga, which puts Italy on the road to better broadband coverage in the next few years. And, in addition to the benefits to the people living in the under-served areas, that will keep Italy in Brussels’ good books.

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