Enel Fiber-Network Unit Said to Discuss Merger With Metrowebby
State-backed network companies meet Friday with advisers
Setback for Telecom Italia, which is also courting Metroweb
Enel SpA, Italy’s biggest utility, is in advanced talks to merge its fiber-optic unit with broadband carrier Metroweb SpA as it prepares to build an ultra-fast network across the country, according to people familiar with the matter.
Executives and investors of Metroweb and Enel Open Fiber are meeting Friday in Milan with their financial advisers to review options for a combination, said the people, who asked not to be identified because the discussions are private.
Metroweb’s investors want to have control of the new entity, the people said. The company operates a fiber-optic network in the Milan area and is valued at about 700 million euros ($800 million), people said in December.
A Metroweb-Enel Open Fiber union would be a blow to Telecom Italia SpA, which is also courting Metroweb and is by far the market’s biggest player. The two fiber-optic players, both with government backing, would unite at a time when Italian Prime Minister Matteo Renzi is trying to speed the introduction of fast broadband in the country. Italy lags behind other major European countries on deployment of Internet connections faster than 30 megabits per second.
Shares of Enel rose 0.9 percent to 3.69 euros at 9:07 a.m. in Milan. Telecom Italia advanced 1.6 percent to 85 euro cents.
Italy’s Economy Ministry has a 24 percent stake in Enel. Italian infrastructure fund F2i SGR SpA owns 54 percent of Metroweb Italia, with the remaining stake held by Italy’s state lender Cassa Depositi e Prestiti through its sovereign wealth fund.
Combining with Metroweb would jump start Enel’s ultra-broadband efforts and bring it expertise as the utility prepares to invest 2.5 billion euros to cover 224 Italian cities in phases with fast Internet connections.
A Rome-based spokeswoman for Enel declined to comment, as did a spokesman for Metroweb.
Renzi, speaking at a press conference in Rome Thursday, said his objective is to have the entire country covered with faster Internet connections by 2020. Enel Chief Executive Officer Francesco Starace said at the same event it’s forming a partnership with phone carriers Vodafone Group Plc and VimpelCom Ltd. unit Wind Telecomunicazioni, and would be open to Telecom Italia eventually joining the broadband plan as well.
In response to Enel’s project, Telecom Italia is considering about 15,000 job cuts, people familiar with the matter said on Wednesday. Vivendi SA, the biggest investor in Telecom Italia, said in a statement that its plan is to grow in Italy and had no plan to reduce the phone carrier’s workforce.
Telecom Italia may consider a partnership with Enel on fiber-network development if it receives an advantageous proposal, Arnaud de Puyfontaine, chief executive officer of Vivendi, was cited as saying in an interview by Il Sole 24 Ore.