Bloomberg News

Telecom Italia Is Said to Face About 6% Cut for Access Fees (1)

July 11, 2013

Telecom Italia Is Said to Face About 6% Cut in Grid-Access Fees

Logos for Telecom Italia SpA and the company's mobile unit TIM sit near satellite dishes and radio antennas on a communications tower in Rome. Photographer: Alessia Pierdomenico/Bloomberg

Telecom Italia SpA (TIT) may be ordered by the country’s communications regulator to cut what it charges competitors for access to its fixed-line grid, costing the phone company as much as 6 percent of revenue from that business, two people familiar with the matter said.

The watchdog known as Agcom is scheduled to meet today to review the pricing for renting “last-mile” access to Telecom Italia’s copper-wire network. The regulator may reduce the monthly fee to about 8.70 euros ($11.18) from 9.28 euros currently, said the people, who asked not to be named because the talks are private.

Telecom Italia, Italy’s biggest phone company, generates about 590 million euros of revenue each year from renting “last-mile” access to 5.3 million lines, according to the people. The fee reduction would cut the rental revenue by about 37 million euros, one of the people said. Customers include Telecom Italia rivals such as VimpelCom Ltd. (VIP:US)’s Wind Telecomunicazioni SpA unit and Swisscom AG (SCMN)’s Fastweb SpA.

Telecom Italia has argued that a less rigid regulatory stance on its proposal to spin off the fixed-line grid is crucial for its success. The company’s directors on May 30 approved the plan to separate the network, setting a precedent for Europe’s indebted phone companies as they look for new ways to raise funds and bargain for lighter regulations.

‘Under Pressure’

“Any reductions of unbundling rates right now, just after the spinoff plan has been presented by the company, could impact the evaluation of the fixed-line network,” said Carlo Alberto Carnevale-Maffe, a professor of business strategy at Milan’s Bocconi University.

Spokesmen for Milan-based Telecom Italia and Rome-based Agcom declined to comment. Telecom Italia shares rose 0.6 percent to 53 cents at 9:01 a.m. in Milan

The regulator, under pressure by Telecom Italia’s rivals to reduce network-access costs, has held public hearings on its proposal for a lower monthly rate of between 8.62 euros and 9.25 euros.

European Commissioner Neelie Kroes, in charge of creating a plan to stimulate investment in telecommunications for the European Union’s administrative branch, told the European Parliament this week that she plans to create more consistent ways to access fixed networks as part of her plan to unify the continent’s infrastructure.

Grid Access

Accessing the grid is “too hard, especially across borders,” she said. “Less red tape, less cost, less hassle: that’s what a single market means.”

Likewise, regulators in Europe have slashed the price mobile operators can charge for access to their networks. The maximum mobile-termination rates dropped 74 percent to 0.67 pence per minute in the U.K. between April 2011 and 2013, according to data compiled by Bloomberg. Termination rates in Italy are as high as 0.98 euro cents per minute this month, compared with between 6.6 cents and 9 cents charged in 2011.

Poland, Belgium, Hungary, Spain, France, Germany and Denmark all reduced the upper limit for the mobile charges this year, too. In the U.K., the country’s regulator is proposing to cut the prices BT Group Plc (BT/A) charges for access to its copper network, in order to encourage network investment and ensure broadband is affordable.

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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