Telecom Italia spin off its fixed assets

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Following the news that Telecom Italia has agreed to separate its fixed-line network into a new business, Luca Schiavoni, regulation analyst at Ovum provides the following comment:

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“Telecom Italia’s decision to spin off its fixed assets comes after many years of discussion and rumours. This move is likely to give the company more flexibility in the retail market, where they currently have to wait for the regulator’s approval before they can market their offers. It will also be a way to reduce its debt and find new sources of profit, given that access services are no longer as profitable as they used to be in the previous years due to the downward trend of regulated access prices for services such as LLU and bitstream.

“However, this is also a move made to avoid further potential regulatory burdens in the future, even though the Italian regulator AGCOM has not yet explicitly hinted at further obligations after TI’s voluntary undertakings were accepted in 2008. Competitors should welcome the creation of a separate company that would manage the network following the Equivalence of Inputs (EoI) model, which has arguably worked very well in the UK with Openreach, the functionally separated arm of BT. This is likely to improve the conditions under which access services are offered to alternative operators.

“Once the separation of the network is complete, we expect AGCOM to carry out a new analysis of the access markets both at the retail and wholesale level, to reassess the relevant regulatory obligations.”

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