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TIM talks up fibre milestone as it clings on to network control

TIM is trumpeting its latest efforts to connect underserved areas to high-speed broadband, a move that could well allow it to retain control of its – and Italy's – fixed infrastructure.

Mary Lennighan

August 17, 2020

2 Min Read
TIM talks up fibre milestone as it clings on to network control

TIM is trumpeting its latest efforts to connect underserved areas to high-speed broadband, a move that could well allow it to retain control of its – and Italy’s – fixed infrastructure.

The Italian incumbent announced it has connected 2,000 municipalities in rural locations and areas with low population density, dubbed ‘white areas’, to its fibre network over the past five months. That means that 65% of households in these areas now have super-fast broadband coverage, based on fibre-to-the-cabinet (FTTC) technology.

TIM naturally took the chance to talk up “this massive infrastructural boost” that will help bridge Italy’s digital divide, as well as its fibre rollout efforts elsewhere, with the result that its fibre network now covers 86% of households. It aims to increase this figure to 90% by December, growing coverage in white areas to 74%.

TIM’s latest network development announcement comes against a backdrop of ongoing uncertainty in the telecoms infrastructure space in Italy.

TIM initially resisted government-driven plans to unify the country’s fixed infrastructure by bringing together the telco’s networks with that rolled out by state-backed Open Fiber (a 50-50 joint venture between electricity utility Enel and Cassa Depositi e Prestiti, the latter also being a TIM shareholder, incidentally), but in recent months has come around to the idea, provided it gets to be the one in charge.

With that goal in mind, earlier this year TIM opened negotiations with US investment firm KKR aimed at the latter taking a sizeable stake in the telco’s fixed access networks business, FiberCorp. When it presented its second-quarter results a fortnight ago, TIM shared that its board will make a final decision on KKR’s investment offer on 31 August.

KKR has submitted a binding offer for a 37.5% stake in FiberCorp. The deal would give FiberCorp an enterprise value of €7.7 billion and would see TIM take €1.8 billion in cash proceeds. TIM would retain control of the business with a 58% stake and would serve as the exclusive builder and technical supplier for rollout and maintenance of FiberCop’s network. The remaining 4.5% stake in the company would be held by Fastweb, in exchange for contributing its 20% stake in Flash Fiber – its FTTH network JV with TIM – to FiberCorp.

All of the above might not seem immediately linked to Italy’s single network plan, but it is. TIM has reiterated its support for the plan, as well as its intention to control any single network, and by pushing ahead with the KKR deal it demonstrates that FiberCorp is a strong, standalone business, albeit with the incumbent as a majority shareholder.

The inclusion of Fastweb in the shareholder structure also goes some way to fulfilling the government’s aim of attracting investment from other Italian telcos in the single network. The stronger FiberCorp is, the more TIM is able to call the shots on the single network. Over to you, Open Fiber.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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