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Telecom Italia shares drop as uncertainty clouds single network project

MILAN (Reuters) - Shares in Telecom Italia fell more than 6% on the Milan bourse on Friday on growing uncertainty over Italy’s plans for a single super-fast broadband network.

FILE PHOTO: A Telecom Italia's control unit for fiber optics is seen in Perugia, Italy, June 23, 2017. REUTERS/Alessandro Bianchi/File Photo

Rome has been trying to create a national network by merging Open Fiber, a broadband firm jointly owned by state lender Cassa Depositi e Prestiti (CDP) and utility Enel, with the landline grid assets of former monopoly Telecom Italia (TIM).

But the plan, for which TIM and CDP struck a preliminary accord last year, has not been finalised, and ministers from Mario Draghi’s national unity government have cast doubts over the project in recent days. [

CDP is also TIM’s second largest shareholder behind French media giant Vivendi.

Industry Minister Giancarlo Giorgetti said on Friday the single network project was meant to help to close Italy’s digital gap with the rest of Europe and speed up fast broadband rollout plans, to be funded by EU recovery funds.

“If the single network project offers answers to the broadband coverage goals then it is acceptable, if it an obstacle to them, then it becomes a problem,” Giorgetti told a news conference.

Innovation Minister Vittorio Colao on Thursday called for the stalemate over the project to be resolved as soon as possible to ensure fast connectivity across the whole country by 2026, but said other options were also being considered.

“While the new ministers’ commitment to accelerate the ultra-broadband national coverage looks clear, how this should occur in their view is not,” Intesa Sanpaolo said in a report.

TIM shares were down 6.3% at 1330 GMT in a European telecoms sector down 1.8%.

Draghi has put digital infrastructure at the heart of his government’s agenda but has yet to clarify whether he intends to implement the unified network project and under what terms.

TIM has repeatedly said it would not agree to holding less than 50% of any network company created from a combination with Open Fiber.

Under the plan backed by the previous government, TIM could initially own more than 50% if the value of the assets folded into the new player justified it, but would need to grant equal access to all market players. The final say on strategic issues would lie with the CDP.

“Governance remains the biggest issue to be solved on the single network project,” Mediobanca securities wrote in a note.

Reporting by Giancarlo Navach and Elvira Pollina. Additional reporting by Giuseppe Fonte. Editing by Mark Potter