Telecom Italia to pour €10bn into fibre as spinoff countdown continues

Telecom Italia to pour €10bn into fibre as spinoff countdown continues

Summary: While investors and customers wait for news on the separate of Telecom Italia's fixed-line businesses, the telco is offering to sweeten the deal by investing in fibre.

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TOPICS: Broadband, EU
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As the markets and investors wait for the decision on whether the widely-discussed spinoff of Telecom Italia's fixed-line business will go ahead (the verdict is expected to be announced this afternoon), the Italian telco is already planning a €10bn (£8.6bn) investment in fibre broadband, Bloomberg has reported.

The investment is to be spread over a 10-year period, and should the fixed-line business be spun off, it will be known as Opac.

"Opac's shareholders could get good returns from these investments because the company will probably work as a utility and have a strong cash flow," Andrea Rangone, a business strategy professor at the Milan Politecnico university, told Bloomberg.

"Revenue and profits will be influenced by the decisions of the Italian authority that will regulate unbundling, which will set the price that other operators will have to pay for access [to Opac's network]."

Meanwhile, the deputy economy minister Stefano Fassina discussed the spinoff and the prospects for the company with Italian TV station Rai 1 on Wednesday.

"The spinoff is being carried out to relaunch qualified investments and create new jobs, over the short and medium term, without having to involve public resources," Fassina said.

"There are private investors that are willing to invest in broadband and superfast broadband if the infrastructure is managed by an entity other than Telecom Italia, and which would guarantee equal network access to all operators."

What is clear is that action is needed, soon. A couple of days ago, reports began circulating in Italian business and IT publications on the poor state of health of Italy's telecoms companies.

There are, of course, many issues behind it, but Telecom Italia is regarded as the chief culprit. Facing tough times financially, announcing a definite decision on whether the spinoff will go ahead is almost seen as too little, too late.

Many issues need to be addressed, such as the company's need to attract further investment  (through banking group CDP, which has previously hinted it may invest in the telco, or other infrastructure investors), the need to modernise and invest in innovation, and the need to restructure the company.

Telecom Italia's fixed-line spinoff is just be one of many hurdles that will have to be overcome for Italy's telcos stand up to global challenges.

Topics: Broadband, EU

Cristina Prina Ricotti

About Cristina Prina Ricotti

After reading molecular biology at university, Cristina rediscovered her passion for writing and geekery, which led to her current career as a blogger and social media manager.

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