October 19, 2012 / 12:35 PM / in 5 years

Little Swisscom interest in Telecom Italia network spin-off

* Telecom Italia is considering fixed network spin off

* Fastweb not interested in sharing active network

* Would consider renting passive infrastructure if needed

By Robert-Jan Bartunek

BRUSSELS, Oct 19 (Reuters) - Swisscom’s Italian arm Fastweb would not invest in the fixed-line access network which Telecom Italia may spin off, the Swiss telecom firm’s boss told Reuters, in a potential setback to Italy’s hopes to boost broadband access.

Telecom Italia said earlier in October it was in talks with state-backed financing body Cassa Depositi e Prestiti (CDP) to move its valuable landline infrastructure into a separate company.

The Italian government hopes such a move could attract outside investors to spur the development of the country’s broadband infrastructure, which is lagging well behind many European peers.

The access network is the system of lines that connect the core telecoms network to homes and offices.

Swisscom Chief Executive Carsten Schloter told Reuters it was unclear whether a new Italian network company would rent out only passive infrastructure, such as ducts with cables to be installed, or also active infrastructure, including cables and switches.

“The latter is not worth it in our view,” Schloter said, adding it was his company’s strategy to differentiate itself by offering higher quality products to its customers.

“In Italy the same is true as in Switzerland: if you offer quality you generate better profits per customer,” Schloter said, signalling Swisscom would mostly use its own infrastructure rather than seeking to share Telecom Italia‘s.

SPIN-OFF LIKELY TO TAKE TIME

Fastweb, which offers telephone, Internet and TV, would be interested in renting passive infrastructure if needed, but would not be interested in buying the network operator itself, Schloter said.

He added it would take some time for a final decision on how the new Italian network operator would look.

“It’s a high-level political discussion which I believe is driven by Telecom Italia looking to bring down its debt,” he said.

Telecom Italia had net debt of 30.4 billion euros ($39.3 billion) at the end of June and analysts expect the access network to be worth between 9 and 15 billion.

Telecom Italia chairman Franco Bernabe has said any spin-off of the network will be done purely for industrial reasons.

In September, Fastweb and Telecom Italia signed a memorandum of understanding to develop fibre optic networks in the country.

$1 = 0.7638 euros Additional reporting by Danilo Masoni in Milan and Leila Abboud in Paris; Editing by Mark Potter

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