Telecom Italia (TIM) took a formal step forward toward merging its fixed network assets with those of rival Open Fiber, inking a memorandum of understanding (MoU) for the proposed integration project.
Though it is non-binding, the MoU means TIM, Open Fiber and their shareholders have committed to negotiate a final deal aimed at creating a single Italian broadband network provider. Open Fiber is majority owned by state bank Cassa Depositi e Prestiti (CDP). Investment firms KKR and Macquarie, which hold stakes in TIM and Open Fiber, also signed the MoU.
The details of the final arrangement have yet to be worked out, but the players said they’ve agreed that a final deal could involve the separation of TIM’s fixed networks infrastructure business from its commercial activities. These assets would then be combined with Open Fiber’s existing infrastructure “in a manner to be defined.” The new entity would be controlled by CDP, with both KKR and Macquarie involved in a yet-to-be-defined manner as well.
TIM, Open Fiber and the other MoU signatories are aiming to hash out a final deal by October 31. However, they noted any agreement will be subject to regulatory approval by domestic and European authorities, as well TIM shareholders.
The long-awaited move to create a national broadband provider in Italy comes as the country ramps efforts to reach more citizens with fiber and other high-bandwidth connectivity.
In January, the Italian government announced the launch of a new €3.65 billion (approximately $4.14 billion) broadband deployment fund. At the time, it said that money would be allocated to operators to help reach nearly 7 million additional locations over the coming years.
As of September 2021, data from FTTH Council Europe showed Italy had 12.5 million homes passed with fiber, an increase of 1.5 million year on year. That put it in third place behind France and Spain and ahead of Germany, which is also seeing significant fiber investment. However, Italy had just 2.4 million homes subscribed to fiber service, putting it in ninth place.