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Italy's League wants single broadband network under state control

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By Giselda Vagnoni

ROME (Reuters) – Italy’s ruling League party is working to create a single broadband network that would be put under state control, one of its senior lawmakers, Alessandro Morelli, said on Thursday.

The far-right League and its coalition partner, the anti-establishment 5-Star Movement, want to create a company that combines the networks of former monopoly Telecom Italia and smaller, state-controlled Open Fiber to help Italy catch up with the broadband services of European rivals.

While the 5-Star had already made clear it wanted the network to be public, the League had not.

Earlier this month, League leader Matteo Salvini said he preferred the state to be in control of infrastructure dealing with public data, but did not specify broadband.

“The single network must be publicly controlled, this is our hope as it is an infrastructure of national interest,” Morelli, who heads the transport and communications committee in parliament, told Reuters in a interview.

He said private investors were welcome in Italy, “but infrastructure of strategic importance must be in the hands of the state”.

Morelli did not explain how the government would control the single broadband company, but sources familiar with the matter said state lender CDP, which is a shareholder in both Telecom Italia (TIM) and Open Fiber (OF), could play a central role.

CDP has a 5 percent stake in TIM and jointly controls OF with state-controlled utility ENEL.

“Obviously one of the options we are looking at is giving a bigger role to CDP in the single network company,” a League source said.

Another source pointed out CDP already controls regulated gas and power grid companies Snam and Terna, and so the country’s strategic networks were “within its mission”.

“The final shareholder structure will depend on the norms that will be approved by the parliament,” this source said.

Italy plans to introduce a framework for the merged network firm similar to a regulated asset base (RAB), which allows regulated returns on investments.

Potentially spinning off TIM’s network and merging it with OF has been at the centre of a power struggle between the phone group’s two biggest shareholders – French media group Vivendi and activist fund Elliott.

Elliott won control of TIM’s board in May. One of its candidates, Luigi Gubitosi, was appointed TIM’s new boss on Nov 18 and vowed to look at the single network idea.

TIM’s former CEO Amos Genish had wanted the phone group to retain control of any merged broadband network.

(Reporting by Giselda Vagnoni, Giuseppe Fonte, Stefano Bernabei; Writing by Giulia Segreti and Giselda Vagnoni; Editing by Steve Scherer and Mark Potter)

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