Enel Is Said to Plan Broadband Grid to Rival Telecom Italia

Enel SpA, Italy’s largest utility, plans to expand into broadband Internet networks in a move that could boost competition to Telecom Italia SpA, according to three people with direct knowledge of the matter.

The project, supported by Prime Minister Matteo Renzi, would involve using Enel infrastructure such as transmission towers and electricity cabinets to host new fiber-optic cables, said the people, asking not to be identified since the proposal isn’t public. Enel would share the grid with phone carriers, the people said.

Access to Enel’s networks could make it easier for Telecom Italia’s rivals to provide faster Web access. The former phone monopoly competes with Vodafone Group Plc and VimpelCom Ltd. unit Wind Telecomunicazioni SpA. Enel has about 450,000 electricity cabinets, about triple the number of Telecom Italia’s phone cabinets, according to the people.

Last month, Renzi’s cabinet approved a plan to use 6 billion euros ($6.3 billion) of public funds to encourage phone carriers to boost high-speed networks. Fewer than 1 percent of Italians with an Internet subscription receive connection speeds of at least 30 megabits per second, according to the Agcom communications authority. That compares with the European average of 21 percent.

Renzi’s Blessing

Enel may send by Tuesday a proposal to Agcom to submit its plan for public consultation, one of the people said. Enel Chief Executive Office Francesco Starace discussed the project with Renzi last week, gaining his support, the people said. No final agreement has been reached and the plan could still fall apart.

A spokeswoman for Rome-based Enel declined to comment. The plan allows the utility to add a revenue source as it tries to cope with slowing electricity demand. Milan-based Telecom Italia, Italy’s largest phone company, is bolstering its fiber-optic networks as part of 14.5 billion euros in planned investments through 2017.

Utilities have moved into communications infrastructure before, in some cases leaving lasting impact on the market. In the 1990s, German energy giants Viag AG and Veba AG joined the scramble to build telecommunications networks as wireless technology became widely available. The assets have become part of Telefonica SA’s German unit.

Enel shares traded 0.6 percent higher at 4.43 euros at 12:53 p.m. in Milan. Telecom Italia was up 1.6 percent at 1.12 euros.

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