MILAN (Reuters) – Italy’s biggest phone group Telecom Italia (TIM) is asking infrastructure funds to come up with bids next week for the assets of smaller broadband rival Open Fiber that will include its own last-mile network, sources said.
The former monopoly is pressing ahead with plans to find one or more funds to help it buy out Open Fiber and create a national champion that can roll out a single broadband network to avoid duplicating investments.
Open Fiber, a wholesale-only fast broadband operator, is jointly owned by state-controlled utility Enel and state lender CDP. CDP is also TIM’s second-largest shareholder.
Sources said more than a dozen infrastructure and sovereign wealth funds had been invited to present non-binding offers for Open Fiber by Nov. 19.
“The idea is that the funds will present a valuation for Open Fiber which will take into account the last-mile fiber assets that TIM will fold into the company,” a source close to one of the interested funds said.
The fund, or funds, are expected to buy around half of Open Fiber with TIM taking a stake of up to half though the structure is still under discussion, sources have said.
TIM did not respond to a request for comment.
One of the stumbling blocks to the creation of a single network has been how much Open Fiber is worth with analyst estimates fluctuating in a range of 1.5-4.0 billion euros ($1.65-$4.4 billion).
TIM’s last-mile network – the bit that goes from the street to homes – has traditionally been copper but since 2016 it has been rolling out a fiber-to-the-home network through Flash Fiber, a joint venture with rival Fastweb
“What’s clear is that TIM needs to bring its clients into play if any fast-fiber plan is to get over the line,” the source said.
Rome has long been pushing for an all-fiber optic network with some state oversight to boost productivity across a country which has one of the lowest take-ups of fixed broadband in Europe.
TIM, which has net debt of 24 billion euros, owns a large part of Italy’s wholesale market and has more than half the retail market.
TIM CEO Luigi Gubitosi recently said only 20-25% of TIM’s ultra-broadband capacity was used by consumers and only 10-15% of Open Fiber’s, raising questions over returns on investments.
Last week Gubitosi said TIM aimed to select one or more infrastructure funds for a deal with Open Fiber by year-end.
Reporting by Elvira Pollina and Stephen Jewkes; Editing by Emelia Sithole-Matarise