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Telecom Italia to spin off network business – Financial Times

Telecom Italia to spin off network business – Financial Times

Telecom Italia is to spin off its network business into a legally separate entity, in an attempt to win favour with the Italian government and potentially paving the way for consolidation with other telecoms infrastructure companies.

The decision to carve out the fixed-line telecoms and broadband network follows months of debate with Agcom, the Italian regulator, and the government. Telecom Italia believes it will be deeper than a similar move in the UK, where BT legally separated its Openreach division last year, as the company will transfer assets to the new unit even as it retains control of the business.

The move comes against a backdrop of tension between Telecom Italia and the Italian government over the role of Vivendi, the French conglomerate that has a 24.9 per cent stake in the business and controls the board. That has led to some calls to renationalise the telecoms network.

Telecom Italia has previously said that it had no plans to separate the network but believes a legal separation could help ease tensions with Rome. It could also increase the chances of a merger with rival Open Fiber, the joint venture between Enel and Cassa Depositi e Prestiti, to form an Italian network “champion”.

The spin-off opens up the possibility of an initial public offering of the network business in Milan, although a potential listing remains at least a year off, according to a person with knowledge of the situation.

A merger and an IPO could bolster the value of Telecom Italia, which has lost almost half its value since the start of 2016. Shares rose almost 6 per cent to €0.72 by late afternoon.

Italy is the fourth European market after the UK, Sweden and the Czech Republic to split its former monopoly telecoms company.

Agcom will nominate a board member to the new business, who will be responsible for compliance to ensure that all telecoms companies that use the network will be treated equally to TI’s own retail arm.

Amos Genish, the telecoms veteran and former Israeli artillery captain who took over as chief executive last year, said: “This project is a giant step forward and a game changer, creating a model of equal treatment for all operators which is unique in Europe; it further strengthens equality of access to the network.”

The Telecom Italia board will vote on the plan on March 6.

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