Italian operators will spend €1.2 billion on fibre-to-the-home rollout in 29 cities by 2020; partnership could be extended.
Telecom Italia and Fastweb have brokered a deal that will see them create a joint venture company to roll out fibre-to-the-home (FTTH) coverage to 3 million homes in major Italian cities over the next four years.
The joint venture will target 29 cities that are already covered by fibre-to-the-cabinet (FTTC) and will therefore focus on the civil works and fibre deployment required to extend the network from street cabinets to the customer premises, Fastweb explained on Tuesday.
Telecom Italia will own 80% of the venture and Fastweb 20%, and the pair will together invest €1.2 billion in the project between now and 2020.
The venture will be financed through a combination of debt and equity, Fastweb said, noting that its own direct exposure will be limited to around €55 million over the next four years, with the money coming form cashflow; the telco said the project will not affect its capex guidance.
In its second quarter results announcement, also published this week, Telecom Italia said it has already accounted for its share of the funding in its 2016-2018 business plan. Under that plan, unveiled earlier this year, it plans to spend €3.6 billion to enable it to reach 84% of the Italian population with fibre networks.
Fastweb said the new venture does not affect its goal of extending ultra broadband coverage to 50% of the population, but it does mean the technology mix has changed. The operator previously intended to cover 11 million premises with FTTC by 2020, but now targets 8 million, while its FTTH footprint at the same date will rise to 5 million from 2 million.
The telcos both plan to offer wholesale access to ultra broadband services using the network, "significantly increasing the level of competition in the market," they said.
The companies face the prospect of significant competition from utility company Enel, which plans to spend €2.5 billion rolling out a wholesale FTTH network in 224 Italian cities, laying cables alongside its electricity network. It too is focusing on major cities, at least initially.
Enel has signed letters of intent with Vodafone and Wind with a view to setting up retail partnerships with them, but said it is open to collaboration with all retail players.
The firm has also put itself into direct competition with Telecom Italia over fibre network operator Metroweb, with newswire reports in May claiming it has tabled a formal bid for the company and that it is willing to raise it to match the price offered by the incumbent. Enel is reportedly looking to merge its new fibre operation, known as Enel OpEn Fiber, with Metroweb.
Whether or not it succeeds in snatching Metroweb from under Telecom Italia's nose, Enel will face stiff competition in the fibre broadband space.
Telecom Italia on Tuesday made it clear that its partnership with Fastweb could be just the start of a broader partnership.
"TIM and Fastweb will study the possibility of extending the partnership to other collaboration sectors too in order to jointly develop passive infrastructure and technologies for the rapid spread of ultra broadband," the telco said.
Source: http://www.totaltele.com/view.aspx?ID=494529&G=1&C=4&page=2
