Telecom Italia Is Said to Discuss Open Fiber Network Deal

Telecom Italia is discussing a deal to lease network capacity from broadband rival Open Fiber that would shift the competitive landscape in Italian telecoms, according to Bloomberg, citing people familiar with the matter.

Executives from Telecom Italia and wholesale carrier Open Fiber met in recent weeks to review a plan for the former monopoly to rent active connections and unused lines from the state-backed challenger, especially in rural areas, said the people, who asked not to be identified. The commercial partnership could be a first step towards a broader alliance and, ultimately, a tie-up of the two companies, the people said.

Open Fiber, a joint venture between state utility Enel and state lender Cassa Depositi e Prestiti, has been rolling out its high-speed network to premises across the country in a challenge to Telecom Italia’s core business. The lender is also a shareholder of Telecom Italia. A deal could help Telecom Italia win favor with the government, which is pushing for better rural internet coverage. Open Fiber is stepping up efforts to bring fiber connections to about 20 million premises by 2022 and signed a seven-year financing agreement for up to 3.5 billion euros with a pool of banks in August.

The expansion was backed by a government keen to stimulate the economy by accelerating broadband internet speeds that lag behind European peers. Critics have questioned the commercial rationale for having costly, parallel infrastructure rather than a single fiber network in which wholesale capacity is rented to rivals to stimulate competition.