Italy begins antitrust inquiry of Telecom Italia over broadband

Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan

By Agnieszka Flak

MILAN (Reuters) – Italy’s antitrust authority said on Tuesday it had launched an inquiry into possible abuse by Telecom Italia (TIM) <TLIT.MI> in the rollout of ultrafast broadband in rural and sparsely populated areas.

TIM has been at loggerheads with Rome over rolling out superfast internet in so-called non-economically viable areas for weeks, after the government alleged the telecoms firm had jeopardized state tenders in the same regions.

In a statement TIM said it had acted in compliance with rules and would prove so at the appropriate time, adding it was confident its actions would turn out to be proper and correct.

The watchdog said it would look into whether TIM had tried to obstruct the process, including by changing its own investment plans in the areas and appealing against the tenders.

By slowing down the tenders “TIM could obstruct the development of infrastructure competition and the entry of new rivals”, the authority said in a statement.

The watchdog is also looking into whether TIM tried to pre-emptively capture clients in those areas, using anti-competitive commercial practices, locking them into long-term contracts and applying prices alternative players are unable to match.

TIM, a former state phone monopoly, had initially said it would not invest in areas where it could not guarantee a return on its investment, forcing Rome to step in to ensure it made good on its promise to connect all Italians to superfast internet and kick-start a stagnant economy.

But in March the phone group, whose main shareholder is French media giant Vivendi <VIV.PA>, said it would be investing its own money in developing a network in some of those areas, arguing the market had changed and justified the investment.

That decision came after TIM lost out in the first of the tenders to Open Fiber (OF), a broadband unit owned by power utility Enel <ENEI.MI> and state lender CDP.

The development of ultrafast internet is a top priority for the government, which last year drafted in Enel to help bridge the digital divide between Italy and the rest of Europe after claiming TIM was dragging its feet.

The two firms have since been embroiled in a race to roll out their networks across Italy, in a contest experts said could lead to a mutually damaging war where both lose money and infrastructure is duplicated.

(Editing by Alexander Smith)