Is Telecom Italia Going to Structurally Separate Itself?

A unit of Cassa Depositi & Prestiti may invest three billion euros in a partnership with Telecom Italia that would structurally separate the Telecom Italia network from the retail services unit. Since 2008, Telecom Italia has operated its network as a functionally separate entity with extensive wholesale operations. 


The new rumor suggests that Telecom Italia is prepared to go the next step and fully separate the network operations part of its business, Bloomberg reports.


Telecom Italia's "Open Access" unit, which has the network infrastructure and employs a 19,000 people in maintenance and operations, might be in play, whether the recent report is true or not (Telecom Italia denies the rumor).


CDP also  says it “isn’t aware” of the proposal. What might be more true is that Telecom Italia is seriously considering structurally separating its network assets business from its retail telecom services business. 


Italy lags Europe in terms of broadband penetration with only 49 percent of households connected against a European average of 61 percent, according to Eurostat data.


Some observers in Europe believe competition will not be sufficient to create conditions for faster broadband investment. Carriers actually argue that current regulations actually discourage that investment. 


The rumored Telecom Italia move might be a way that the telco could essentially give the problem to somebody else. Since 1995, Telecom Italia has operated only fixed networks, as its mobile operations were spun off into a separate company. 


Debt reduction seems to be driving the thinking. Other European telcos are divesting assets as well, in order to trim debt and prepare for investments in mobile services.