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Telecom Italia: Is the EU against merging broadband networks?

The European Union is preparing to oppose the merger of its broadband networks Italy, under him control of Telecom Italia SpA.

The plan is to create a single national broadband network which will be controlled by the former Telecom Italia SpA monopoly, according to people who know more about the issue. However, the μετοχές of Telecom Italia fell even further in June.

telecom italia european union
Telecom Italia: Is the EU against merging broadband networks?

Those in charge competition led by Margrethe Vestager are concerned that a proposed combination of Telecom Italia's fixed network and the smaller, state-backed rival, Open Fiber SpA, will create a monopoly, reversing two decades of deregulation, said whistleblowers, who asked not to be identified as the discussions are private.

Telecom Italia CEO Luigi Gubitosi has been pushing for an Open Fiber deal for months, and has made it clear that the company will not relinquish control of the network once it becomes the only fixed line broadband provider in Italy. It plans to design a complete set of corporate governance solutions to guarantee the rights of minority shareholders, according to Bloomberg.

A Telecom Italia spokesman declined to comment. The European Commission stated in an e-mail statement that "he watches developments "and rejected requests for further comment.

However, EU officials are reluctant to control the company only by the country's largest communications service provider, citizens said. It is common for companies to informally discuss their plans with antitrust officials before any formal notice.

The EU's view will be of great importance, as it could possibly rule out an agreement, if it is ever formally agreed, even though both companies are based in Italy. The European Union has refused to allow national authorities to review telecommunications agreements, even when located in a single country.

The plan follows months of discussions between the government, Telecom Italia and state-owned investment firm Cassa Depositi e Prestiti SpA - a major shareholder in Telecom Italia, which also owns half of Open Fiber.

Telecom Italia: Is the EU against merging broadband networks?

Telecom Italia has already started a process to separate the fixed line infrastructure to raise the required cash. The debt business has shrunk in the face of stiff competition and a mediocre Italian economy. Last month, it agreed to sell a 37,5% stake in a new unit that will own fixed cables running from roads, homes and businesses - the so-called secondary network - to investment company KKR & Co. for € 1,8 billion.

The new company, FiberCop, will have an initial business value of 7,7 billion euros. Telecom Italia sent a preliminary notification to the EU about the FiberCop project earlier this month, according to an informed source.

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