Italian phone incumbent Telecom Italia has won support from Italy’s regulator for its plans to spin off its fixed-line business, reports Reuters.
In a speech to the Italian parliament, Angelo Marcello Cardani, the president of regulatory authority AGCOM, is reported to have praised the plans, saying that a broad and deep separation would pay regulatory dividends.
Telecom Italia’s board approved the separation scheme in May and will hope the move helps the operator to slash its substantial debt of more than €28 billion ($35.8 billion).
Regulatory authorities are keen on the plan because it is seen as a way of leveling the competitive playing field and ensuring that Telecom Italia’s rivals – including Vodafone (Milan, Italy), Fastweb (Milan, Italy) and Wind (Rome, Italy) – can access fixed-line services on the same terms as its retail business.
Similar moves have already gone ahead in the UK, where the carving up of fixed-line incumbent BT (London, UK) into separate retail, wholesale and infrastructure units is believed to have spurred broadband competition.
Nevertheless, Telecom Italia (Milan, Italy) has been asking for a “light-touch” approach to regulation, worried that it will be disadvantaged against its competitors as a consequence of legislative moves.
Its proposed spin-off would include assets and resources for developing and managing the passive access network as well as active network components.
The separation is also likely to be drawn-out process given its complexity and the political sensitivities associated with the plan.
Although Telecom Italia had been aiming for a deal with AGCOM by early 2014, a source told Reuters that the separation could take up to 18 months to complete.
A spin-off could precede the sale of a stake in the fixed-line business to Cassa Depositi e Prestiti (Rome, Italy), a state-backed investment group, helping Telecom Italia raise funds to pay down debt and make network improvements.
The operator recently launched 4G services and is keen to expand the coverage of its “mobile ultrabroadband” network to more than 60% of the Italian population by the end of 2015.