Telecom Italia Gears up to Face the Competition


Italian telecom market updates suggest that the incumbent telecom operator, Telecom Italia has started experiencing the real heat of competition from its rival Enel in the broadband market. Taking the challenge, the operator is reportedly in talks over a deal to swap a stake in its wholesale arm TI Sparkle for fiber optic broadband operator Metroweb.

Telecom Italia is holding talks with state-owned bank Cassa Depositi e Prestiti (CDP) and infrastructure fund F2i. CDP controls Fondo Strategic Italiano (FSI), one of Metroweb’s parents. The operator had in the past some unsuccessful talks with Metroweb for a possible merger. There were also reports that Telecom Italia will offer to pay cash for F2i’s 54% stake in Metroweb and exchange a 25% stake in TI Sparkle for the 46% of Metroweb held by FSI.

Acquiring Metroweb would ramp up the rivalry between Telecom Italia and the utility company Enel, which last month unveiled plans for a €2.5 billion fiber-to-the-home (FTTH) network. With a 7,200-kilometer fiber network, Metroweb would give Telecom Italia’s footprint a significant boost.

This week, Telecom Italia shared more details of its high-speed broadband deployment, including the fact that it is currently laying hundreds of kilometers of fiber every hour. Telecom Italia said they are proceeding at a rate of 250 km of fiber optic cables laid on average every hour. In total, the Italian incumbent has rolled out more than 11 million kilometers of fiber-optic cables to support its high-speed broadband plan. It has covered 1,100 Italian municipalities with fiber, while 6,300 are able to access 4G services via the TIM mobile network.

Telecom Italia’s fixed and mobile network infrastructure now reaches over 45% of properties with fixed ultra-broadband services and over 91% of the population with 4G. The operator aims to reach 84% of homes with fiber optic broadband, including 20% with fiber-to-the-home (FTTH), and to reach 98% mobile ultra-broadband coverage by the end of 2018.

Telecom Italia has earmarked €4.8 billion for investment in ultra-broadband in the 2016-2018 period. Around €3.6 billion will be spent on the fixed network, with 20% allocated to FTTH. With these strategic movements, the incumbent operator is gearing up to face competition with its rivals in the Italian telecom market.

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