Italy's Lender Favors a Single Network to Boost Economic Growth

(Bloomberg) -- Italy’s state lender Cassa Depositi e Prestiti favors a single ultra-fast landline network for a country that lags behind its European peers in terms of Internet speed.

“The Italian Parliament recently approved a rule that determines incentives for a combination of networks and it’s preferred that phone carriers identify market opportunities in this area," CDP Chief Executive Officer Fabrizio Palermo told reporters Saturday at an event in Rome.

CDP is Telecom Italia SpA’s third-largest investor with a stake of almost 5 percent, according to data compiled by Bloomberg. The state lender also owns 50 percent of carrier Open Fiber SpA. The other main investor in Open Fiber is Italy’s biggest utility Enel SpA.

The new CEO of Telecom Italia, Luigi Gubitosi, is considering options for the company’s landline grid, an asset valued about at 15 billion euros ($17 billion).

Gubitosi started preliminary talks with Open Fiber to consider a deal and the two companies signed a memorandum of understanding to explore a network-sharing agreement or even a merger, people familiar with the matter said last month. Telecom Italia also hired advisers to study options on its landline grid, people said.

Broadband Networks

Enel CEO Francesco Starace said Friday that Open Fiber and Telecom Italia have been in touch over a possible plan for their broadband networks.

The subject has been controversial in Italy, whose populist government led by Prime Minister Giuseppe Conte favors the creation of a single network company partially owned by state lender CDP. Deputy Premier Luigi Di Maio has said he may push for a merger of the grid with Open Fiber.

Last month Italy’s communications regulator rejected Telecom Italia’s plan to legally separate the carrier’s domestic landline network, saying it wouldn’t boost competition.

To contact the reporters on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net;Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Kevin Costelloe, Brian Wingfield

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