UPDATE 1-Telecom Italia strikes broadband JV with Fastweb
(Recasts with Fastweb deal, adds details)
MILAN, July 26 (Reuters) - Telecom Italia and Swisscom unit Fastweb have agreed to create a joint venture that will invest 1.2 billion euros ($1.32 billion) to help speed up the rollout of an ultrafast broadband network in 29 cities across Italy.
The move will help Italy's biggest phone group fend off rising competition in high-speed Internet infrastructure, especially from power utility Enel, which is seeking to establish itself as a credible rival by proposing to use its pylons and ducts to lay fibre optic cables.
Connecting homes to superfast Internet is a pet project of Prime Minister Matteo Renzi who is keen to close the digital gap between Italy and the rest of Europe and spur economic growth.
Renzi has openly championed Enel's efforts to invest in broadband infrastructure after Telecom Italia dragged its feet. The Fastweb deal could help new CEO Flavio Cattaneo sweeten the somewhat soured relationship with the state.
The JV, which will be 80-percent owned by Telecom Italia, could be extended to other sectors, Telecom Italia said in a statement.
The new partnership will seek to connect around 3 million homes with a fibre-to-the-home broadband connection with speeds of up to 1 gigabyte per second.
The announcement came as the former state phone monopoly, controlled by French media group Vivendi, nudged up guidance for domestic core earnings this year after reporting better-than-expected first-half results, helped by a stronger performance from its mobile operations.
The company said it expects low single digit growth in domestic earnings before interest, tax, depreciation and amortisation (EBITDA) in 2016 on an organic basis. Continuación...