Telecom Italia's spin-off plan in jeopardy over cut in access fees

Telecom Italia said the move by the Italian telecoms regulator to cut the fees it charges other operators to access its fixed-line network could jeopardise its plans to spin off the network into a separate company.

In a statement, the Italian incumbent said the move by Agcom to cut local loop unbundling rates to €8.68 ($11.31) from €9.28 per line would have an economic impact on the company of around €110 million based on 2012 revenue.

"The decision will have a material impact...on investment plans and the course of the access network spin-off," Telecom Italia said in a statement. It added that the Agcom decision puts the project "at great risk."

The decision to cut LLU rates was welcomed by Vodafone Italy, which competes with Telecom Italia on the mobile and fixed markets. However, the incumbent operator said the ruling is contrary to guidelines from the European Commission, and is "in contrast to a strategy that, in recent years, has led to an alignment of the LLU fee of Telecom Italia to the weighted average of the major European countries (Germany, France, Spain and the UK), currently €9.29/month."

The European Commission said it plans to keep a close watch on the latest developments in Italy.

"This Agcom decision is very relevant to our planned costing recommendation for which we received Communications Committee support this week," Ryan Heath, the spokesman for EU Commissioner Neelie Kroes, told the Wall Street Journal.

Kroes is currently preparing a package of proposals to create a single market for telecoms, and stable LLU rates as well as low or non-existent roaming charges for mobile services and lower mobile termination rates will be core elements of the proposals.

Telecom Italia announced the decision to spin off its fixed network in May, and so far has received regulatory blessing for the move from Agcom.

For more:
- see this Wall Street Journal article
- see this Bloomberg article
- see this Telecom Italia release

Related Articles:
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Telecom Italia approves fixed-line network spin-off plan
Telecom Italia values fixed network at €13B-€15B; delays spin-off decision
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