Telecom Italia-Metroweb Merger Talks Not Fruitful

Telecom Italia updates its discussions with the government authorities about Metroweb, another Italian service provider for a possible takeover was not fruitful to their satisfaction. There were reports that Telecom Italia has been in talks with Metroweb management and government for merger. Officials from Telecom Italia commented that the merger talks are in uncertainty as their movements could not be directed to achieve positive results.

Metroweb owns the largest fiber optic network in Milan and Lombardy, the largest metropolitan fiber optic network in Europe with approximately 375,000 kilometers of fiber installed. The former AEM group company established in 1997, the Citytel has been licensed by the Ministry of Communications and has signed an agreement with the City of Milan to build new sections of the network. AEM has signed an agreement with the e.Biscom Group to develop broadband services for telecommunications. Citytel became Metroweb in 1999, focusing its activities on providing a network of fiber optics “off” (dark fiber). e.Biscom acquired 33% of Metroweb with a capital increase. In 2003, AEM took over from Fastweb (formerly e.Biscom Group) 33% of Metroweb, thus becoming 100% owner.
Telecom Italia-Metroweb merger talks
Reuters reported that the CEO of Telecom Italia, Mr. Marco Patuano said on Friday discussions with the government to buy fiber optic network firm Metroweb had not gone in the right direction but he did not close the door to resuming talks at the right conditions.

Telecom Italia was aiming to reach full ownership of partly state-owned Metroweb but was ready to give the government a role to ensure equal network access to rival operators.

Consolidation of telecom companies has been the trend in Europe with Orange eyeing on Jazztel, Vodafone’s takeover of Ono in Spain. Kong-based Hutchison Whampoa and Spain’s Telefónica were in talks over a possible merger of their respective UK subsidiaries Three and O2. Telefonica’s attempt to takeover the German service provider E-Plus got approval from European commission on September last year.

The consolidation process will make Telecom Italia stronger by transferring the subscribers and networks in Italy and also by Metroweb’s highly focused business strategies. Telecom Italia officials have decided that operations of Metroweb must be in their hands.

Media reports say the owner of the Metroweb is yet to be convinced of the benefits of the merger and is not happy with a proposal for gradual takeover. Last month, Mr. Cassa Depositi e Presiti (CDP), owner of the state’s stake in Metroweb, had rejected a proposal by Telecom Italia to gradually take over full ownership.


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