Observers consider Italy as a country with enthusiastic ideas badly applied. But occasionally one of these ideas is implemented. Last month's events prove it.

On the one hand, further steps towards the privatisation of the state-owned shares of the company STET have been taken: the Chamber of Deputies last week adopted a Decree which allows the sale of the shares held by the Treasury; at the same time, on July 18th, STET and Telecom Italia (the former monopolist public company) finally merged as had been planned in late 1996.

On the other hand, the bill on the Communication Authority, presented by Posts and Telecommunications Minister Maccanico, passed in the Chamber of Deputies on July 16th, has become law on July 29, 1997.

These internal changes in the Italian scenario have attracted the interests of the major telecommunication groups.

On July 2, 1997, the state-controlled STET, AT&T, and the European cartel Unisource (set up between the Swedish Telia and the Dutch and Swiss Telecom providers) have signed a Memorandum of Understanding in Rome.

Pursuant to this agreement, next fall joint ventures, operating over three continents: Latin America, Europe and, last but not least, Asia, will be organized. In Latin America, the joint venture agreement between STET and AT&T foresees the creation of two 50% controlled companies to provide global telecom services and for transmitting telecom traffic managed by other operators. In Europe, STET will buy out a 30% participation in the AT&T-Unisource joint venture, now held by its TMI (TeleMedia International), which specializes in services to international clients throughout Europe.

AT&T officers also have revealed their interest in the scheduled privatisation, next fall, of a group which last year had revenues of $24.15 billion. Mr.Walter, who recently resigned as President and Chief Operating Officer of AT&T, at the moment of the signature of the agreement, disclosed the intent of his company to acquire equity participation in the privatised STET. This investment will have to comply with the fixed limits of 5% for a foreign partner.

At the same time, new entrants on the Italian scene are stimulating competition. At a press conference in Rome on July 24th, ENI announced that it will join Albacom with a 35% participation in order to create a real alternative competitor to STET-Telecom Italia. The partners of the Albacom "cartel" are British Telecom, BNL, Mediaset and, now, ENI. Once the complete liberalisation of the telecommunications sector in Italy has been achieved, Albacom is expected to become a "full operator," competing across the board with STET-Telecom Italia as a provider of landline telephony services. Toward this end, the Albacom partners plan to invest 1,500 billion Lire over 10 years.

Albacom is also interested to become the third mobile operator, in addition to Telecom Italia Mobile and Omnitel, to supply mobile telephony service in Italy. Officially, nothing has been firmly decided yet. But observers are sure that all the rules and the targets of the joint ventuire are clear and "on the table".

In Albacom's landline operations, British Telecom will be the leader. Mediaset, on the contrary, will lead the mobile telephony project. BNL will co-ordinate the investments and the finance; while ENI will manage the "infrastructure." Indeed, ENI will be responsible for its own infrastructure. Its optic-fibre cables network, at present, is one of the most efficient and extensive in Italy.

This is how, in Italy, the telecommunications world is quickly reaching a new balance. The players are awaiting January 1st, 1998, when the telecommunications will be fully liberalized and open to free market competition. In fact it is expected that the Italian Government will adopt in the next days necessary regulations implementing EC directives on cable TV, mobile communications, full competition and ONP (Open Network Provision Voice Telephony).

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