Exclusive: Italy to spend 60% more of EU funds on better broadband, sources say

FILE PHOTO: Spools of fibre optic cables in Perugia, Italy, June 23, 2017 REUTERS/Alessandro Bianchi/File Photo

ROME (Reuters) - Italy aims to spend almost 7 billion euros ($8.33 billion) in European recovery funds on ultra-fast networks, up 60% from a previous goal, as ministers lay out alternatives to a long-delayed single national broadband plan, sources told Reuters.

The government of Mario Draghi, which took office in February, is revising a national Recovery and Resilience Plan (RRP) that would entitle it to some 206 billion euros by 2026 from an EU programme to help nations hardest hit by the novel coronavirus.

Two sources close to the matter told Reuters Rome planned to raise the amount spent on broadband, 5G and satellite infrastructure to 6.7 billion euros from 4.2 billion euros earmarked in January by the previous government.

The total funds for boosting digitalisation amount to some 49 billion euros, up from a previous 46.3 billion euros, including investments in public administration and grants for small and medium-sized companies, one of the sources added on condition of anonymity.

Italy ranked fourth to last in the European Union for digital competitiveness in 2019, the Digital Economy and Society Index (DESI) compiled by the European Commission found.

The government is also devising alternatives to a previous plan to merge the fixed-line access network of former monopoly Telecom Italia (TIM) with those of smaller rival Open Fiber, the sources said.

Talks between the two have stalled over disagreements around governance and the value of the assets to be folded in the new operator.

Open Fiber is jointly controlled by Italy's biggest utility Enel and state lender Cassa Depositi e Prestiti (CDP). CDP is TIM's No. 2 shareholder behind France's Vivendi

TIM has repeatedly said it would not agree to owning less than 50% of any combined entity - something that could trigger regulatory issues.

Draghi's ministers are discussing an alternative plan to use EU funds to roll out fast broadband networks across Italy's 20 regions using the best technologies available, including Fixed Wireless Access (FWA) systems, the sources said.

Such a scheme - championed by Innovation Minister Vittorio Colao - includes bonuses to help consumers pay ultrafast connection fees.

The government is also studying a less ambitious plan to merge Open Fiber with Fibercop, a vehicle controlled by TIM that runs the group's secondary network going from street cabinets to homes, a third source said.

Under this project, TIM would not fold its primary network - connecting switching centres to street cabinets - into the venture, preventing the former phone monopoly having a majority stake.

Both options under discussion leave the door open to co-investment schemes allowing operators to build their own networks in some areas and have commercial agreements elsewhere.

($1 = 0.8401 euros)

(Additional reporting by Stephen Jewkes in Milan; editing by Barbara Leiws)

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