Italy based utility company Enel had approached Italian telecommunication regulator AGCOM offering its intention to build Italy’s fiber broadband network. Enel has officially written to AGCOM to help with building a nationwide ultrafast broadband telecommunication network.
Telecom industry is watching Enel’s move since the entry of the utility provider to fiber optic broadband network will change the equations in the market, especially posing threat to Telecom Italia’s business.
Enel is also controlled by the Italian government. Enel wrote the letter to the regulator on April 14 mentioning that its domestic network could be used to help install fibre optic cables more economically. That is true. In United States and many other markets utility companies build fiber optic networks. The advantage with utility companies are use of existing poles, duct networks, building facilities etc, apart from utilizing the manpower effectively.
Reuters reports that Enel management believes it can help develop a key infrastructure for the future of the country. Enel said its contribution would be done in a synergistic way with what the telecom operators have done and planned, bringing clear benefits to less populated and industrial areas.
Enel is a multinational manufacturer and distributor of electricity and gas. Enel, which originally stood for National Entity for Electricity (Ente nazionale per l’energia elettrica), was first established as a public body at the end of 1962, and then transformed into a limited company in 1992. In 1999, following the liberalization of the electricity market in Italy, Enel was privatized. As of February 2015, the Italian government is the owner of 25.5% of the company’s shares.
In 2014 Enel employed about 70,000 people, works in about 30 countries and at the end of 2013 – with 80.5 billion euro of revenue and a market capitalization of 31 billion euro – is the 56th company in the world by revenue.
Italian Prime Minister Matteo Renzi supports a 12 billion-euro project that will provide high speed broadband services to 85 percent of the population. The project will connect majority of the population to the next generation fiber optic network within six years, using Metroweb, a company partly owned by state lender Cassa Depositi e Prestiti (CDP). CDP’s differences in opinion with Telecom Italia had stopped Government’s plans.
A few days before Telecom Italia said talks with the government about its plan to buy into Metroweb had gone in the wrong direction but indicated that it could be resumed under the right conditions. Local media in Italy reports that the government wanted to use Enel to bring the new fiber optic network under public control.
As the news came out, Telecom Italia’s shares were down 1.8 percent at 1.041 euros by 1639 London time. Enel’s shares were down 0.5 percent at 4.2 euros.
Enel is focusing much of its domestic strategy on developing its power distribution grid and smart digital technology and has about 1.2 million km of electric power lines and 450,000 electric power distribution cabinets across Italy. Enel also has 31 million power and gas retail in Italy. Enel has set up Wind, the third biggest of Italy’s four mobile network operators, which is now owned by Vimpelcom.` CDP owns the government stake in Metroweb. Now it is hoping to bring Telecom Italia on board along with other network operators including Vodafone.