The creation of a single high-speed broadband network is officially underway in Italy, after the approval of two essential memorandums of understanding on Monday.
The project has been attempted (and failed) in various forms since 2006, but the pandemic – and the massive, incoming European funds – have highlighted the importance of bridging the country’s digital divide and fostering its development via a ubiquitous and fast internet connection.
After a fiery month of negotiations, the boards of private telecoms company TIM and State lender CDP have convened to greenlight a shared roadmap for the way forward.
Competitors TIM and Open Fiber (controlled by CDP) have agreed to merge their infrastructural broadband assets and create a managing structure for the future newco, to be called AccessCo, that will operate the entirety of Italy’s high-speed broadband network.
The majority of AccessCo shares will belong to TIM, while more board members and veto powers will be given to the State via CDP. The former will nominate the CEO, the latter the chairman. This manner of governance will allow for openness to other co-investors while refraining from building vertical integration bounds, according to CDP.
This deal was approved within the government on Friday and presented to TIM’s board on Monday afternoon. The deadline set for the creation of AccessCo is March 2021.
Before entering AccessCo, however, TIM must create a newco of its own, FiberCop. The key piece of this puzzle was also put in place on Monday, when TIM signed a deal with KKR, an American private equity fund.
The latter had offered €1.8 billion for 37.5% of FiberCop and TIM’s ageing last-mile network (that which reaches inside the buildings from street-level cabinets), with the aim of reconverting it to optical fibre. Fastweb, another telecoms company, is also throwing its hat into the FiberCop ring, and will own 4.5% of the resulting newco. TIM will control it with 58% of shares.
FiberCop will eventually be merging with Open Fiber, which is controlled by CDP, thus creating AccessCo. This is how the unitary network will effectively come into existence.
The TIM-KKR deal was blocked back in early August by the government, who had asked TIM to take some time to reconsider merging with Open Fiber and perhaps cede its assets, in order to exert control over the so-vital-for-the-country’s-future infrastructure.
TIM fought back against the intervention, not wanting to give up control over its assets as suggested by some. So, the government came up with the hybrid power division that was agreed by TIM’s board on Monday.
Now that everything is set in motion, a few issues still stand. First, the State’s “golden power” checks, which will have to ascertain that the national interest is not impaired in any way by the merger (this will almost certainly not be an issue). Then, antitrust authorities will have to approve this manner of integration.
Geopolitically speaking, the developments are significant, as the entrance of an American fund in AccessCo will likely be incompatible with that of Chinese investors.
In the context of the ongoing economic and political “tech Cold War” between China and the US, which is also fought through investments and technological diffusion in foreign nations, the deal is a win for Washington, who has been pushing to limit Chinese influence in allied countries.
