Adding fierce competition to the incumbent telecom operator, Telecom Italia, the utility company cum broadband network provider Enel has announced its plans to bid for a controlling stake in Metroweb. Partnership with Metroweb would add value to Enel’s efforts to build nationwide fiber optic network to deliver high speed broadband. The Milan based Metroweb is one of the broadband network providers having strong presence in the country. Telecom Italia has been trying to acquire Metroweb to accelerate its fiber broadband deployment, but failed in its initial attempt.
Reuters news reports that Enel had estimated the value of Metroweb at around US$862 and is looking to get a major share, that is 54 percent, which is currently owned by the infrastructure fund F2i. By getting the majority of the stakes, Enel plans to merge Metroweb with its newly created broadband company, Enel Open Fibre.
Enel had recently announced an investment of more than US$ 2.8 billion in Italy, targeting to cover with around 7.5 million houses and businesses under its fiber optic broadband network. Enel plans to cover 224 large cities in Italy with fiber optic cables. Enel officials have confirmed that the company is in talks with Metroweb for a possible acquisition. Although Telecom Italia values Metroweb at around US$ 735 million, its bid may have the edge over Enel because of the stake in Sparkle it’s prepared to offer to CDP. Telecom Italia officials also confirmed that the company intends to raise the targets in its 2016-18 business plan regarding profitability and speed of investments at a board meeting scheduled for 13 May.
Fearing the severe competition in the market and slowdown in its deployment due to its own internal issues, it was reported from local media that Telecom Italia was considering cutting up to 15,000 jobs, equivalent to nearly 30 percent of its workforce. The sources said Telecom Italia may lose around 5 million wholesale customers as a result, most of them from Vodafone Italia and Wind, with Telecom Italia increasingly frustrated by a plan it considers to be unfair competition. Vodafone Italia and Wind are expected to reach a strategic and commercial partnership with Enel to develop the broadband network across Italy. French media company Vivendi, which is Telecom Italia’s top investor with a 24.9 percent stake, responded to the reports about potential job losses by stressing that its investment in the Italian operator is not intended to cut jobs.
Enel’s largest investor is Italy’s economy ministry with a stake of around 24 percent and hence the newly created Enel Open Fibre is supported by the Italian government. Even Telecom Italia has been invited to join Enel Open Fibre. Enel had clarified that it has no plans to become a telecom operator but wants to offer similar services in other countries and regions where its presence is existing for example in Latin America. Enel had discussed with Vodafone and Wind to reach a strategic and commercial partnership to develop the broadband network across Italy and remained open to commercial cooperation with all retail telecoms operators.