Investigation into Italian broadband project
By Sophie Mosca | Thursday 26 July 2012
On 25 July, the European Commission opened an in-depth inquiry to investigate whether a joint venture between the Italian Province of Trento and the Italian telecommunications operator Telecom Italia to build fibre infrastructure is in line with EU state aid rules.
Following a complaint, the Commission opened an investigation into a capital injection of €50 million to be granted by the Province of Trento to this joint venture Trentino NGN. The Commission decided to launch a more in-depth investigation into this infrastructure, which is expected to be switched off once the fibre network becomes operational, making Telecom Italia the sole owner of the joint venture. The Commission has doubts whether the project is carried out on terms that a private player operating under market conditions would have accepted. First, the planned fibre network targets areas where no private investor has showed an interest so far. Second, the Commission has doubts as to whether the in-kind contributions made by Telecom Italia to the joint venture have been adequately valued and whether there are any other hidden advantages for Telecom Italia from its dual role of shareholder and supplier of services to Trentino NGN. Third, there are doubts as to whether the envisaged return on equity for the province is in line with market conditions.
“It is, however, crucial to ensure that public funds are not used to favour one market player, alter competitive market conditions and roll back the benefits of a liberalised telecommunications market,” said Competition Commissioner Joaquín Almunia.