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September 2, 2020
As expected, Telecom Italia’s board has approved a plan to spin off its fixed access network and merge it with altnet Open Fiber.
The proposed plan, as we reported last week, will see TIM hive off its FTTx business and its FlashFiber joint venture with Fastweb into a separate entity called FiberCop. Private equity firm KKR has agreed a €1.8 billion deal to take a 37.5 percent stake in FiberCop, leaving TIM and Fastweb with stakes of 58 percent and 4.5 percent respectively.
The second and perhaps most significant stage of the plan will see FiberCop merge with Open Fiber, creating a new nationwide broadband wholesaler, called AccessCo. The deal has been carefully structured to appease all participants: TIM will own at least 50.1 percent of the venture, giving it that all-important majority ownership of its fixed networks that it has been keen to maintain. However, governance duties will be shared with state-run investment bank Cassa Depositi e Prestiti (CDP), which controls 50 percent of Open Fiber. The other 50 percent is owned by Italian utility Enel.
On the surface, it is easy to see the appeal of creating such a massive nationwide wholesale provider that has the much-needed scale to make huge investments in FTTx expansion. However, it comes at the expense of competition, which is also extremely important for rapid ultrafast broadband rollout.
Take the UK, for example, where incumbent Openreach was happy to sweat its copper network even though it was clear for years that FTTP was the more desirable outcome. Now, Openreach is pushing aggressively towards full fibre, thanks to a combination of regulation and cajoling by watchdog Ofcom, and – significantly – the rise of competing infrastructure rolled out at scale by the likes of Virgin Media and CityFibre.
Anyway, the finer points of the TIM-Open Fiber deal have yet to be worked out; they hope to do so by the end of the first quarter of 2021. Open Fiber’s ownership structure might have already changed by then. According to a report by Il Sole 24 Ore late last week, Australian infrastructure fund Macquarie has renewed its interest in acquiring Enel’s Open Fiber stake.
Macquarie reportedly first approached Enel in June, but no deal emerged. Now though, the future of Open Fiber and Italy’s wholesale fixed broadband market is looking a little clearer because the TIM deal will see AccessCo be majority owned by an Italian company. With that certainty in mind, Mcquarie is said to be preparing to make a formal bid for Enel’s Open Fiber stake sometime this month.
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
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