Italy considering cap in tenders for broadband rollout

Italy could limit the areas a single broadband provider can win in tenders for those places where high-speed services are offered by one operator, three sources close to the matter said.

The move being considered by Innovation Minister Vittorio Colao aims to promote competition, as Rome prepares to deploy almost 7 billion euros ($8 billion) of European recovery funds to expand ultra-fast connectivity, the sources told Reuters.

One option under discussion envisages a 50% cap, meaning a single bidder could not secure more than half of the single-provider areas, known as “grey areas”, one of the sources said adding the scheme was not final.

The cap is consistent with the approach of Colao, a former Vodafone CEO, in protecting competition. It would mark a U-turn from the previous government’s plan to merge the fixed line of sector incumbent Telecom Italia (TIM) (TLIT.MI) with that of rival Open Fiber, with TIM owning – at least initially – a majority stake in the combined entity.

The single network project was on the cards last year when U.S. fund KKR spent 1.8 billion euros for a 37.5% stake in TIM’s last-mile network connecting street cabinets to people’s homes.

KKR has tabled a 10.8 billion euro non-binding, cash proposal for TIM, a move which sources have said aims at protecting the U.S. fund’s investment in TIM’s grid.

To speed up broadband rollout without harming competition, Rome introduced a measure this month forcing operators to share installation costs if working in the same area and coordinate on permit requests. Reuters