Telecom Italia moves to spin out access networks unit

Telecom Italia’s board of directors approved on Thursday, May 30, a proposal to spin out its fixed access networks business into a separate company. The cash-hungry national service provider hopes to convince Cassa Depositi e Prestiti, a state-backed investment fund, to take a stake in the resultant company.

Telecom Italia has not established a timeline for the separation.

The new unit would include both copper and fiber-optic networks. Telecom Italia pledged the company would offer competitive access to its infrastructure via local loop unbundling and “virtual unbundling line access” in the case of its fiber to the cabinet (FTTC) and fiber to the home (FTTH) broadband access plant.

The resulting company would have an enterprise value of 14 billion euros ($18 billion), according to analysts who spoke with The Financial Times.

AGCOM, Italy’s telecommunications regulatory authority, is now evaluating the proposal, which would have several benefits for the company.

“This move is likely to give the company more flexibility in the retail market, where they currently have to wait for the regulator’s approval before they can market their offers. It will also be a way to reduce its debt and find new sources of profit, given that access services are no longer as profitable as they used to be in the previous years due to the downward trend of regulated access prices for services such as LLU and bitstream,” says Luca Schiavoni, regulation analyst at market research and analysis firm Ovum. The move might also head off additional regulatory action from AGCOM, Schiavoni believes.

Telefonica, a major shareholder in Telecom Italia, is thought to be unhappy with the proposal. However, it did not participate in the vote on the measure, according to ZDnet.

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