Summers have always been “very hot” in our country. Not surprisingly, the most important economic dossiers have almost always been decided in August, when Italians are under the umbrella. This summer, too, is proving to be particularly hot for Italian telecommunications, as we wait for the new government that will emerge from the polls on September 25 to finally untie the knots of the “single network” and for the fates of TIM and Open Fiber to be clarified once and for all. To try to understand what may happen and what scenarios to expect, we exclusively and fully interviewed Hon. Alessio Butti, head of the Media and Tlc Department of Fratelli d’Italia and an expert in the field.
Key4biz. Hon. Butti, so much has been said on the issue in recent weeks, can you clarify for us what is your party’s position on the single network and what role TIM and Open Fiber should play?
Alessio Butti. Nothing new under the sun. Our position has always been clear and consistent and was recently reaffirmed by the president of our party, Giorgia Meloni. It baffles, frankly, the false exegesis of some journalists, evidently uninformed or in bad faith. We simply want Italy to return to being a European player in telecommunications, as France and Germany are, where the incumbents are still under the control of their respective governments.
Key4biz. How to decline this strategic goal with the “single network”?
Alessio Butti. What we have always said is that we want the new fiber network, all the way to homes, to be a single, national, publicly controlled (hence Italian) and wholesale only network. From the beginning we have supported this model that separates the network from services and that has so many important precedents in our country, just think of Terna that serves companies operating in the electricity market, but also RFI that offers the infrastructure to Trenitalia and Italo. To come back to us, it is unthinkable that the national incumbent of the fixed network should also be present in the retail market, especially in a telecommunications market such as the Italian one where, contrary to the rest of Europe, cable has never existed (which would have changed the competitive dynamic, as, moreover, has happened in the rest of Europe). But I would also like to add a far from secondary aspect. FdI is the only party that has presented and supported a series of industrial policy proposals on the network, cloud and 5G. And Giorgia Meloni is the only party leader to have dealt in detail with a game of such extraordinary importance for the country’s digital transformation, on which the other parties have remained silent for long months, a game that is still open for which more than 40 billion investments are planned.
Key4biz. Even the government is talking about a single network. So what has changed and why did you decide to prepare an alternative Plan?
Alessio Butti. What has changed is the overall context and in particular the path to be taken to achieve this result. Our project is nothing more than the logical consequence of the proposals made and discussed in Parliament. Let’s be clear, we do not want to get into the investment dynamics of companies operating on the stock exchange, but politics has the task and, I would also add the duty, to point out the paths of development of a sector that is so crucial for economic growth. Our direction is clear, but it will be Giorgia Meloni who will decide whether, how and when to present our Project. However, it is quite clear that our proposal for a “single network” is radically different from the one proposed by CDP-TIM, despite what is superficially read around.
Key4biz. Let us start then from the general context…
Alessio Butti. One of the changed conditions lies in the failure of the management of Open Fiber. It is a company that even the market had given a lot of credit to, a jewel of our country that all of Europe envied us, thanks precisely to the wholesale only model, later introduced in the new European Electronic Communications Code. Unfortunately, with the new CDP management of Open Fiber many things have changed in the company’s strategy. The best managers have fled or are leaving the company. And as if that were not enough, only a few months ago, in December 2021, the new management at the helm of the company, all CDP-tagged, had drawn up a new plan, but it has already been disregarded. Open Fiber unfortunately, and I say this with sincere regret, no longer has the credibility nor the ability to be the linchpin of the “single network” operation as thought up to now by CDP. Let me also say that management must be chosen on the basis of managerial skills and not political affiliation. That is why a turnaround capable of sustaining a highly relevant industrial project is needed.
Key4biz. So let us get into the details, why should TIM keep the network, as you claim, contrary to the CDP-TIM plan?
Alessio Butti. This is the second reason why we came up with our alternative proposal. We are convinced that TIM cannot and should not lose the network. There is no telecommunications operator in the world without the network. It would be like having a restaurant without the kitchen. The network should not be separated; instead, it should remain with TIM and, if anything, TIM should aggregate Open Fiber‘s network under itself. It is the services that should be divested. And we are so convinced of this choice, to the point that we expect the stock price to soar on the stock market in the following months, because this is what international investors are looking for: compelling business models, sustainable development plans, full adherence to European standards, benevolence of governments…
Key4biz. Please explain to us further…
Alessio Butti. The motivation is obvious: without the network and only with the service company, TIM could hardly stand. Among other things, in a few months from now we will surely end up with the loss of thousands more jobs, in addition to the 3,400 already announced, including voluntary exits and early retirements. So we are talking about very heavy social consequences that we cannot afford. Instead, leaving the network in the hands of TIM is therefore also the best guarantee for employment defense. Everyone in the industry knows perfectly well that it is the network that guarantees the company’s cash flow and ensures the highest margins.
Key4biz. Then there is the issue, on the one hand, of Vivendi, which is now the key partner in TIM, and on the other hand of Macquarie and KKR, respectively in Open Fiber and Fibercop…
Alessio Butti. Vivendi‘s absurd claims that it values TIM‘s old copper network at as much as 31/34 billion euros effectively make the CDP-TIM-OPEN FIBER plan unfeasible. It would be impossible to justify CDP having to pay such a disproportionate amount for a network that will be decommissioned by 2026, the date when the Italian government, through the mouth of Minister Vittorio Colao, has committed to Europe to cover the entire Italian territory with fiber to homes and offices. It would then inevitably give rise to litigation and a lengthy discussion about the value of the network, in addition to technical problems because of the difficulties and time it can entail to spin off a network. So I repeat, who and how could possibly justify such an outlay by CDP? At the Rimini Meeting, Arnaud De Puyfontaine, CEO of Vivendi, stressed the importance of the single network, calling on everyone to move for it to be done, without worrying about who will own it, whether public or private. We find it hard to understand such an approach, all the more so when behind these statements there is a parallel development of negotiations on the sale of TIM‘s network to CDP, with, on the one hand, the 31-34 billion euros requested by Vivendi and, on the other hand, the 21-25 billion beyond which CDP would not like to go.
Key4biz. What if the bid was based on a lower amount?
Alessio Butti. But, even if it were “only” 15 billion euros, it would certainly be too much. I frankly don’t understand how CDP and Macquarie can, in this situation, submit an offer even if it is non-binding at these values. I think it would be better to wait, also out of institutional respect, for the result of the elections and the new government that will take office after September 25. But this, as we know, depends on the institutional sensitivities of the parties involved. Not surprisingly, such prudence also applies to ITA, another important dossier on which, as Giorgia Meloni stated, it would be better to wait before making any decision “…given that the government is resigning and can only deal with current affairs…from September 25 onwards everything can change and the relaunch of our national airline will be taken care of by whoever governs…”
Key4biz. Let us go into more detail. What are the main points of the Plan you are preparing?
Alessio Butti. Let’s start first with the fundamental point: if TIM retained control of the network, but with a public majority from CDP, the company would return to being an Italian industrial asset (Like Enel or like ENIor Leonardo). We are interested that the new TIM can start again with a more solid and profitable foundation than the current one and create value for everyone: for large and small shareholders, for workers and for the country.
Key4biz. Does anyone accuse you of being hostile toward foreign investors?
Alessio Butti. Just what we needed! No preclusion to anyone. If Macquarie, which currently has 40% of Open Fiber, or KKR, which currently has 38% of Fibercop wanted to join the new network company, for our part we could only be pleased. Likewise, if Vivendi itself retained its presence in TIM‘s shareholding structure, as a minority shareholder. And why would we be against that? It would be a very good investment for them as well, because we are convinced that the new TIM that we envision could, thanks to the focus on the network, enhance its value in an important way compared to its current values, and this, from what we understand, financial analysts know it very well.
Key4biz. So you don’t want to chase back foreign investors….
Alessio Butti. I have read, on this topic, nonsense pregnant with prejudice and generated by “not knowing” about our work. I want to repeat this crystal clear: not only do we have nothing against it, but we believe that foreign investors can and should gain from market operations in Italy, indeed we are happy about it, because this makes our economy more credible and open for investors from all over the world. It is, if anything, the current CDP-TIM plan that seems instead to want to be a blatant and unjustified gift to the French shareholder alone, dictated by reasons that we do not understand and that therefore undermine the seriousness and credibility of our country’s economy. On this point I note, frankly, a resounding silence in the press.
Key4biz. Can you tell us more about your Plan?
Alessio Butti. If you will allow me, I prefer not to go into some of the details and stop at what, in various ways, has been reported in the press these days. But one of the points that we are still working out in every detail concern the sale of all fixed and mobile customers. With the proceeds, TIM would be able to lower its debt and at the same time qualify as a wholesale only operator, a condition that will allow it to take advantage of the more favourable regulatory conditions that the new European Electronic Communications Code recognizes for wholesale only operators, while at the same time guaranteeing greater certainty and greater economic returns to investors. In fact, the European Commission has recognized that only this model can guarantee greater competition by eliminating the conflict of interest of an incumbent that is present in both markets, wholesale and retail at the same time, and for this reason it recognizes more favourable regulatory treatment for wholesale only operators. There is nothing ideological here. It is just common sense, supported of course by European regulatory references. Moreover, I would like to emphasize, we are in close discussion with European decision makers.
Key4biz. With what territorial scope of operations?
Alessio Butti. We believe that TIM should focus its presence and investments in Italy and Europe or in the Mediterranean basin, but in any case, in synergistic areas and not in areas and economies currently completely disconnected from the Italian one.
Key4biz. What about TIM Brasil?
Alessio Butti. We are fully convinced that TIM should sell TIM Brasil. Why? Simply because it is not able to guarantee the necessary investments for TIM Brasil, a mobile operator that also must invest heavily in 5G. And if we think about the necessary infrastructure, it should be remembered that Brazil has a territorial extension equal to that of the whole of Europe. With the sale of its stake in TIM Brasil, it is worth noting, TIM could further significantly reduce the company’s debt. Again, nothing ideological, just shrewd industrial strategy, and we are pleased to see that other political forces have come to the same conclusions as we have about the future of TIM Brasil.
Key4biz. And what would happen to Open Fiber?
Alessio Butti. TIM should acquire Open Fiber‘s network and absorb it into its own. The reason is very simple: we believe that Open Fiber is not in a position to play the pivot role of the “single network” operation. But the problem is, if anything, a different one. We need to ensure, at the same time, that the minimum level of competition that currently exists in fixed remains, to avoid the European Unionlegitimately objecting to the risk of re-monopolization of fixed. TIM should then sell the “redundant” FTTHnetwork in the Black Areas to another incumbent or a new entrant, so as to maintain infrastructure competition in the country’s Commercial Areas and industrial districts. These are also things we have repeated to the point of boredom and are now finally being re-evaluated by all.
Key4biz. How important is it for you to ensure competition?
Alessio Butti. As I have just said, it is very important for us to preserve an adequate level of competition in our country, especially in the fixed line, for the benefit of Italian consumers and businesses, which must continue to benefit from more choice and competitive prices, but also for the benefit of the hundreds of Italian providers who represent an asset for Italy today and who in this way will be able to continue to compete on a more equitable basis. All this will also act as an incentive for the new TIM to continue to cable in fiber, urging and facilitating the migration of new customers. A requirement, this, which is indispensable to avoid what is happening today, that is, that we continue to maintain rents on copper (and its old world) at the expense of the country’s competitiveness.
Key4biz. And what would be the impact for the mobile sector?
Alessio Butti. We have a unique opportunity to consolidate the mobile market in Italy and thus move from 4 to 3 operators. Mobile operators have been complaining for years about the difficulties in the Italian market. TIM‘s mobile customers could be acquired by its current competitors, Vodafone, WindTre and Iliad. Alternatively, in case they are not interested, then new players could also enter the game. But these are business assessments that pertain to the strategic and commercial choices of individual companies and not to the assessment of government or political forces that indicate paths or directions for the development of the industry.
Key4biz. What do you say to the accusation that FdI wants to renationalize TIM’s network?
Alessio Butti. Pure bad faith. Because, excuse me, what would it be the CDP-TIM project involving the sale of TIM‘s network to CDP to the tune of billions? Wouldn’t this be, that is, a re-nationalization of the network? And what would be the alternative on the table? And don’t you find it fair that public funds from the PNRR (the Italian government has allocated more than 5.5 billion euros for new fiber and 5G networks) should be used by an Italian company for the good of Italian citizens? After all, I remember that PNRRmoney is still public money. Or do we want to grow the GDP of others with Italian public money?
Key4biz. Someone said that, in case you go to government, the execution of your Plan would be government interference in the market. What is your response?
Alessio Butti. This is all so ridiculous…Hasn’t it always been like this? But why is it that for the current “single network” plan, the CDP-TIM one, for instance, was it not the government that gave precise directions to Cassa Depositi e Prestiti, by the TIM CEO’s own admission during the call with financial analysts? And what about the previous acquisition of Open Fiber, was it not a precise decision of the then Renzigovernment?
And of CDP‘s 10% stake in TIM, did it not come from three separate acquisitions ordered by the governments of the time? And what about other transactions, such as Autostrade, where Benetton did not step back by divine indication? Although in that case it may have happened “by grace received”. It is time to end certain ideological hypocrisies and it is the imperative time to think about the industrial interests of the country. Of course, there are rules that will have to be followed and CDP will have to do so as well, in total autonomy. Now more than ever. For our part, we are ready to assume all our responsibilities before international markets, industry workers, consumers, and the country.
*Translation by Aurora Halili.
