Italy may limit engagement in broadband rollout tenders!

According to four sources familiar with the situation, Italy may encourage competition by limiting a couple of aspects in which a broadband supplier may even win in tenders where rising services are provided by a single operator.

According to Reuters, Italian Innovation Minister Vittorio Colao has met with European Union officials about the cap as Rome prepares to spend nearly 7 billion euros ($8 billion) from the EU Recovery Fund to expand ultra-fast connectivity.

The country’s telecommunications industry is currently in turmoil as a result of KKR’s proposal to buy Telecom Italia, Italy’s largest phone company (TIM).

According to two sources, one option under consideration to ensure a competitive broadband environment is a 50 % cap on tenders that can truly be bid on, implying that no single bidder could protect more than half of single-provider zones, also known as “grey areas.”

According to sources, Brussels is unofficially pushing hard for the 50 % cap, but Rome might prefer for quite a larger value, with a cap of up to 66 % getting considered.

The former Vodafone CEO’s approach to competition represents a U-turn from the previous government’s plan to merge sector incumbent TIM’s fixed-line with rival Open Fiber, with TIM owning – at least initially – a majority stake in the combined entity.

When KKR paid 1.8 billion euros for a 37.5 % stake in TIM’s last-mile network which connects street cabinets to homes of people the year before, the single network initiative was on the table.

KKR has proposed a non-binding cash suggestion for TIM worth 10.8 billion euros, according to sources, to protect the US fund’s investment in TIM’s grid.

Under the EU-funded plan, Italy will cover a portion of the cost of broadband infrastructure, possibly up to 70%, while leaving network ownership to the operators who built it.

To expedite the rollout while preserving competition, Rome introduced a measure this month requiring operators to share installation costs and coordinate permit requests if they work in the same area.

($1 = 0.8926 euros)

Source: Reuters