By Elvira Pollina
MILAN (Reuters) – Telecom Italia (TIM) and Italian State lender CDP approved a preliminary agreement on Monday to create a national ultrafast grid operator combining the former phone monopoly’s network assets with those of smaller rival Open Fiber.
The creation of the new network operator, promoted by the government, is designed to help Italy close its digital divide with other European countries.
As a first step, TIM approved on Monday the sale of a 37.5% stake of a new unit to U.S. investment firm KKR. TIM is transferring into the unit its last-mile network going from street cabinets to customers‘ homes.
Swisscom’s Fastweb will own 4.5% of the new company, called FiberCop, which will work to switch TIM’s last-mile mainly copper grid to fiber.
TIM’s board also agreed to sign up to a broader government brokered process to create a single national network by merging FiberCop into state-backed Open Fiber, a wholesale-only ultrabroadband unit partly owned by CDP.
The state lender is also TIM’s second largest shareholder after France’s Vivendi.
TIM said it would own at least 50.1% of the newly merged entity into which it would also transfer its primary network, going from switching centres to the street cabinets.
It added the independence and third-party status of the company would be guaranteed by a shared governance mechanism with CDP, which would emerge as a major shareholder in the venture, open to other players.
A due diligence process will define the value of network assets which will be folded into the new company with the aim of reaching a deal by the first quarter of next year, TIM said.
In a separate statement CDP said its board had approved the letter of intent on the single network project with TIM.
(Reporting by Elvira Pollina; editing by Grant McCool)