home  › Markets

Enel CEO: Italy could have a high speed tlc network in 3-5 years

by Laura Serafini

EnelCEO Francesco Starace discussed for the first time the possible involvement of the electric company in a project to cable Italy with an ultrabroadband telecommunications network.

“We are liaising with every telecom company, and they are quite interested because it is a good idea. Interested parties can carry out the complete cabling of Italy in short times, and at very competitive costs: it will take between 3 and 4 years, maybe 5— that’s an extraordinary pace,” he said at a shareholders’ meeting on Thursday.

“It is an opportunity that we gave to all the interested telecoms operators,” the manager said, referring to Telecom Italia and others.

“Our industrial plan requires the replacement of 33 million of electric meters between 2016 and 2019: in that context, as our operators will have to dig in order to intervene on our line, we could also lay a fiber cable connecting the house to our control unit. In this way, one can act very quickly on the last mile, and the costs would be very competitive, as the additional costs to lay fiber in that circumstances would be residual.”

Starace then explained that Enel would be reimbursed for laying and maintaining the cable, something it had to do because, “If anyone else touches our network, they'd get an electric shock,” he said, responding to a question from a shareholder.

The possibility he referred to of reducing costs is related to the fact that Enel's upgrade of its meters is an investment that's already been factored in to its plans and will be paid back through customer electric bills, the norm for regulated business like management of electrical grids.

In recent statements to the French press Starace also gave some figures, which yesterday, perhaps intentionally, he chose not to repeat. The executive mentioned a total cost of €2.5 billion for swapping out meters and an several hundred million in additional expenses to lay fiber.

Synergy between telecom operators and electricity providers comes from the fact that the cost of the final section of underground cable doesn't have to be duplicated and would appear just once, on the electricity bill.

Clearly, the opportunity Starace describes can't be applied to the entire national grid: and telecom companies would still have to bear important costs: who will connect Enel's fibers with those of the telecoms? And how much will it cost to upgrade to ultra broad-band? All this needs to be calculated in order to understand whether whoever ends up being the one managing traffic and data will be able to show a return that makes sense given the investment needed.

Yesterday, Starace reiterated that he doesn't plan to own the “33 million lengths of fiber” and certainly has no plans to go back to managing a telecom business. “The experience the group had with Wind was really important and taught us a lot,” he said. “Mainly that the telecom business is very particular and requires a high degree of specialization, which is why it's not useful for an electric company to be in telecommunications.”