The KKR / TIM operation has given new life to the “single network”, an industrially outdated and critical project from an antitrust point of view. However, politics has begun to believe in it again, because now TIM’s possible stew, feared by the KKR takeover bid, would pave the way for a spin-off of the network to free it from the influence of non-European shareholders. The spin-off and nationalization of the TIM network would even make the merger with Open Fiber pleonastic, since the two parties would find themselves under the same control (the Italian state) and would in fact form, from an economic point of view, a single company (a holding company would be created into which the TIM and Open Fiber networks would converge).
While national security would serve to overcome antitrust constraints, competition problems would be mitigated by imposing the wholesale-only model, i.e. that of Open Fiber: a neutral network open to anyone who requests access, without discrimination. This whole scenario is likely, especially after the recent opening of Vivendi, but we must not indulge with enthusiasm because, despite the changed approach of the Italian government and greater listening by the European Commission, the basic obstacles remain and they even add new ones.
Doubts remain about the advisability of a remonopolization of the access network when the opposite is happening throughout Europe: KKR itself has just invested in the Netherlands in a new FTTH network competing with the incumbent KPN. In Italy, the spin-off operation would have biblical times that could not stop the initiatives underway: TIM and Open Fiber would continue to develop their respective networks according to different and competing models, competing in the tenders to be announced in the gray areas. The two operators would therefore continue to diverge rather than converge towards a single network, which in the end would consist only of an expression with which to indicate the common corporate hat for a variety of infrastructures that are far from integrated. For TIM there would also be the problem of co-investment, that is the FiberCop commercial model based on the exclusive control of the network by the vertically integrated TIM alone: a system therefore clearly incompatible with a single neutral and wholesale-only network. Furthermore, the narrative around “national security” contains dangerous simplifications that will sooner or later come to a head.
In fact, to ensure safety, it is not possible to separate only the passive component of the network (raceways, dark fiber, etc.), the machines and hardware that make it operational and manage the services must also be included in the perimeter. In many cases it is Chinese technology. Indeed, it would be curious to unbundle the TIM network to free it from the influence of Washington, but then leave it susceptible to being remotely managed by Beijing. The policy towards vendors should therefore be reviewed, starting with the current ones. Finally, it is not certain that the separation of the network and the sharing of costs and debt can take place at the discretion, especially of the private parties.
After having turned a blind eye in terms of antitrust, the Commission would hardly allow a socialization of TIM’s liabilities and costs to pass, because decency and European state aid rules would oppose it. In conclusion, the new phase opened with KKR’s takeover bid makes the single network appear more likely only from a political point of view, but technically it remains a more difficult project than you think.