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Capital Calls: Telecom Italia’s singular problem

2 minute read

Optical fibre cables of Telecom Italia are seen in a telephone exchange in Rome, Italy, December 20, 2013.

LONDON, May 6 (Reuters Breakingviews) - Concise insights on global finance.

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READING THE TIM LEAVES. What a difference a letter makes. Shares in Telecom Italia (TIM) (TLIT.MI) fell as much as 9% on Thursday amid speculation about a change of heart by new Prime Minister Mario Draghi over national broadband strategy. The reason is admittedly tenuous. Newspaper La Repubblica jumped on a reference in a 269-page document outlining the government’s investment plans to broadband “networks” (reti, in Italian), as opposed to “network” (rete). The implication is that Draghi wants to nix a long-planned merger between TIM’s network and smaller state-backed rival Open Fiber.

True, Draghi, a former Goldman Sachs (GS.N) banker and European Central Bank chief, probably lacks the interventionist instincts of his predecessor, Giuseppe Conte. And it would have been quick and easy to clear up any confusion over the wording. The fact Rome is yet to do so suggests Draghi may indeed be lukewarm about an idea that always looked good for TIM shareholders and less so for Italian broadband users. (By Ed Cropley)

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