November 12, 2018 / 12:11 PM / a month ago

UPDATE 1-TIM ready to talk to Open Fiber on network but wants to keep control

(Adds details, shares, trader)

MILAN, Nov 12 (Reuters) - Telecom Italia (TIM) favours the creation of a single network in Italy and is ready to cooperate with smaller broadband rival Open Fiber but wants to retain control of the asset, Chief Executive Amos Genish said on Monday.

Genish made his comments after news at the weekend that Italy is preparing legislation that could lead to a merger of TIM’s network with Open Fiber and that the government wanted to push it through as soon as possible.

Open Fiber, owned by state-controlled utility Enel and state lender CDP, has been rolling out a fibre optic network in direct competition with Italy’s biggest phone group. Industry experts have said such duplication makes little economic sense.

“TIM continues to support the idea of a single network in Italy to avoid unnecessary duplication of infrastructure investment,” Genish said in an emailed statement

TIM, whose top shareholder is French media group Vivendi , has already begun a process to put its network assets into a separate company, NetCo, fully controlled by TIM.

Genish, a telecoms veteran close to Vivendi, has never ruled out selling a stake in NetCo in future, but always said he wanted TIM to retain control and reiterated that on Monday.

“Only by maintaining control can we guarantee the current levels of investment and employment, as well as the group’s future successful deployment of the 5G infrastructure,” he added.

“De-consolidation of the network would put at risk not only the company’s future, but also the digital ambitions of the country,” he added.

The issue of control of the network has been a bone of contention at board level with some of the directors put forward by activist fund Elliott pushing for Genish’s resignation because he is against TIM losing control of its infrastructure, sources familiar with the matter have said.

Shares in TIM rose more than 5 percent on Monday, a move traders attributed to the desire of the government to push ahead with the network issue.

Italy’s Deputy Prime Minister Luigi di Maio, who also doubles as industry minister, said on Sunday the government was working to set the conditions to create a single player.

He added Rome would set up talks with all the parties involved and there would be no “proletarian” expropriation.

The government expects to settle the matter by the end of the year, Di Maio added without giving any more details. (Reporting by Agnieszka Flak and Giulio Piovaccari Editing by Keith Weir)

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