Telecom Italia gets regulatory blessing for network spin-off plan

Telecom Italia's bid to spin off its fixed network assets into a separate company has got off to a good start after the move was warmly welcomed by Italy's telecoms regulator, Agcom.

According to Reuters, the regulator described the plan as "bold and innovative" and suggested it could earn certain regulatory advantages for the incumbent operator. Bloomberg also noted that a key requirement for lighter touch regulation would be for Telecom Italia to give up control of the fixed network.

"The broader and deeper the separation, the more significant the regulatory dividend," Angelo Marcello Cardani, president of regulator Agcom, said in his annual speech before parliament in Rome, Reuters reported.

Telecom Italia approved the spin-off plan in May as part of efforts to cut its debt mountain of more than €28 billion. Nevertheless, despite the regulatory approval the process is expected to take up to 18 months because of the complexity of the issue.

When the spin-off is completed, rival operators such as Vodafone, Wind and Fastweb would all have equal access to the fixed network and would compete on a level playing field with Telecom Italia. If it did not own the network, the incumbent operator would also not be subject to the strict rules that currently govern its activities on the Italian market.

Vodafone, Wind and Telecom Italia all offer fixed and mobile services on the Italian market, while 3 Italy is a mobile-only player. Hutchison Whampoa's bid to ramp up its presence by merging its 3 unit with the mobile operations of Telecom Italia recently failed after Telecom Italia ended talks with the Hong Kong giant, saying it wanted to focus on the fixed-line spin-off.

Telecom Italia has said that it could sell a stake in the separated company to state lender Cassa Depositi e Prestiti.

For more:
- see this Reuters article
- see this Bloomberg article

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