November 20, 2012 / 1:06 PM / 5 years ago

Minister backs Telecom Italia tie-up with CDP over network-press

MILAN, Nov 20 (Reuters) - An Italian minister strongly endorsed on Tuesday a plan for a tie-up between Telecom Italia and state-owned agency Cassa Depositi e Prestiti (CDP) to speed up the rollout of a national broadband network.

The debt-laden telecom group is assessing whether to separate its fixed-line assets into a new company and sell a stake in it to CDP. It is also considering a proposed sizeable investment by Egyptian tycoon Naguib Sawiris.

“My desire is that Italy rolls out a high-quality network in a short period of time. I hope we will be able to convince Telecom Italia to forge a strong tie-up with the CDP,” Industry Minister Corrado Passera said in interview with online newspaper Linkiesta.

Italy, mired in recession as it drives through austerity measures to cut its public deficit, lags European peers in terms of broadband access.

Parties backing the spin-off, including the Italian government, argue it would free resources for much-needed broadband investment.

The move could also help Telecom Italia cut its debt and win more favourable regulatory conditions in the country.

Passera’s remarks come just two days before of a key Telecom Italia strategy meeting expected to consider the potential investment by Sawiris, along with the possible network spin-off.

“I don’t think the sector can afford having two or three networks or even starting from scratch because costs would be unsustainable. The possible investment of Sawiris in Telecom does not change my view,” Passera was quoted as saying.

The minister cited as examples of a single network company Italy’s power network group Terna and gas grid operator Snam.

After Sawiris’ interest in investing in Telecom Italia through the purchase of newly issued shares emerged last week, newspaper reports speculated Telecom Italia may not go ahead with the network separation plan.

The group has repeatedly said a decision on whether to go ahead with the possible network spin-off would be taken by the end of the year and be based on industrial reasons. (Reporting by Danilo Masoni; Editing by Mark Potter)

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