The European Commission has given the green light to TIM’s FiberCop plan, which it says does not raise competition concerns.
Following a consultation into the project, Brussels confirmed that it does not constitute a merger, and therefore does not need to pass through further regulatory hoops.
The plan will see the Italian incumbent shift its fixed access network assets into FiberCop, an entity in which it will hold 58%; investment group KKR has agreed to take a 37.5% stake via a deal that values the unit at €7.7 billion, while Fastweb will contribute its 20% stake in Flash Fiber, an FTTH joint venture with TIM, in return for a 4.5% stake. Despite the fact that the new entity will have at least two telcos in its ownership structure, the EU is happy for it to go ahead.
The project “cannot be considered a concentration under EU legislation and therefore does not need to be notified under the European Merger Regulation,” it said in a statement, published by TIM.
The decision makes sense, given that Fastweb’s participation is based on an existing JV. But one cannot help but wonder whether the Commission has considered the possibility, or indeed likelihood, of other operators joining the FiberCop club.
Tiscali signed contracts with TIM regarding its investment in and usage of the FiberCop network at the weekend. As a result, Tiscali will cease investment in its own high-speed infrastructure, plough cash into FiberCop instead, and connect its customers to the FiberCop network.
Other operators could quite well follow suit – there are a handful of smaller in the high-speed fixed broadband space in Italy – considering that for the most part rolling out fibre is a scale game and that FiberCop is set to become Italy’s single, ultrafast broadband network. The state-championed single network project still has to clear a number of hurdles before it can move forward, including hammering out the details of Open Fiber’s participation, once 50% owner Enel has reached a deal with Macquarie over the future of its stake. Enel is sitting on a €2.65 billion offer from the Australian firm’s infrastructure unit, but CEO Francesco Starace this week indicated that a deal could be announced in the next few weeks…while simultaneously making it clear that he would not be hurried on the matter.
There are still multiple ‘i’s to be dotted and ‘t’s to cross in the single network project, but it will happen. And that has doubtless informed the EU’s thinking in the case of FiberCop. Because this is not as simple as a couple of telcos coming together to share the cost of fibre rollout – not that that in itself would necessarily raise competition concerns – but rather a national plan to fibre up the country as quickly as possible, with a reasonable number of retail players providing services to consumers.
Italy is languishing near the bottom of Europe’s FTTH penetration ranking – penetration was at just 4.1% a year ago, according to the oft-quoted statistics from the FTTH Council and IDATE – but the market is one of the fastest growing.
Through FiberCop TIM aims to connect 76% of properties in underserved areas by 2025.
Initiatives like this will help the EU creep towards its broadband targets for the next few years, which include 100 Mbps broadband for all households by 2025 and Gigabit connectivity “for all of the main socio-economic drivers” – schools, transport hubs and main providers of public services and digitally intensive enterprises, that is.
Back in Italy, TIM is naturally happy with the EU’s decision on FiberCop
“This is an important step towards the launch of FiberCop’s operations, which is confirmed for the first quarter of 2021, as already disclosed to the market,” it said.
There are many steps on this journey, but they are now being taken at a fair pace.