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Telecom Italia Shares Drop, Single Network Project in Doubt

Shares in Telecom Italia fell as much as 5% on Friday on growing uncertainty over Italy’s plans for a single super-fast broadband network.

Rome has been trying to create a national network by merging Open Fiber, a small broadband firm owned by state lender Cassa Depositi e Prestiti (CDP) and utility Enel, with the landline grid assets of former monopoly Telecom Italia (TIM).

CDP is also TIM’s second largest shareholder behind French media giant Vivendi.

But the plan, for which TIM and CDP struck a preliminary accord last year, has not been finalised, and two ministers from Mario Draghi’s national unity government cast doubts over the project in recent days.

Industry Minister Giancarlo Giorgetti said on Wednesday Rome would re-examine the previous government’s plan for the single network to ensure it is feasible, adding it would make sense only if the network were under state control.

Innovation Minister Vittorio Colao on Thursday called for the stalemate over the project to be resolved as soon as possible to avoid holding up Italy’s broadband rollout plan, and said other options were also being considered.

“While the new ministers’ commitment to accelerate the ultra-broadband national coverage looks clear, how this should occur in their view is not,” Intesa Sanpaolo said in a report.

TIM shares were the top loser on Italy’s blue chip index, down 5.3% by 1034 GMT.

Draghi has put digital infrastructure at the heart of his government’s agenda but has yet to clarify whether he intends to implement the unified network project and under what terms.

TIM has repeatedly said it would not agree to holding less than 50% of any network company created from a combination with Open Fiber.

Under the plan backed by the previous government, TIM could initially own more than 50% if the value of the assets folded into the new player justified it, but would need to grant equal access to all market players. The final say on strategic issues would lie with the CDP.

“Governance remains the biggest issue to be solved on the single network project,” Mediobanca securities wrote in a note.

Reporting by Giancarlo Navach and Elvira Pollina. Writing by Giulia Segreti. Editing by Mark Potter

Source: Reuters

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