Tue, Jan 22, 2019 - Page 10 News List

Regulator rejects Telecom Italia landline spinoff plan

Bloomberg

Italy’s communications regulator turned down Telecom Italia SpA’s plan to separate its landline network, arguing that a spinoff of the indebted carrier’s most valuable asset would not help boost competition in the domestic market.

Green-lighting the project, proposed last year by then-Telecom Italia chief executive officer Amos Genish, would let the former phone monopoly continue to enjoy “a significant competitive advantage” nationwide except in Milan, Agcom said in a document posted on its Web site over the weekend.

A separation would not ease any regulatory burden, according to the Italian government agent, which cited Telecom Italia’s plan to retain full control of the grid.

A representative for Telecom Italia declined to comment.

Agcom is to put its ruling, which was earlier reported by Bloomberg, to a 45-day public consultation. After that, the regulator is to make a final decision.

Analysts have estimated the value of the network at 15 billion euros (US$17.06 billion). The grid, which Telecom Italia rivals access to provide their own broadband services, is considered of national importance to the government.

The notion of spinning off Telecom Italia’s fixed-line business has for years been debated by the country’s telecom industry. The subject has also been a controversial issue in Italy, whose government led by Italian Prime Minister Giuseppe Conte favors the creation of a single network company partially owned by state lender Cassa Depositi e Prestiti, which holds almost 5 percent of Telecom Italia.

Italian Deputy Prime Minister Luigi di Maio has said he might push for a merger of the grid with Open Fiber, which is backed by utility Enel SpA and Cassa Depositi e Prestiti.

Agcom’s decision might lead Luigi Gubitosi, who took over as Telecom Italia’s CEO in November last year, to withdraw the proposal in its current form, people familiar with the matter said.

The company faces growing competition and is struggling under one of the European telecom industry’s biggest debt burdens and heavy pension liabilities. It has not paid a dividend on its ordinary shares since 2013. The stock lost more than 30 percent of its value in the past 12 months.

Telecom Italia last week reported an slowdown in its home market and predicted that pressure from competitors would continue to hold back earnings this year.

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