Wind investigation

3 Mar 2003

Wind, Italy’s second largest telco and only combined wireless and wireline provider, is being investigated by European regulators over allegations that it received illegal aid from the government. The probe concerns loans and capital increases granted to the loss-making operator by its owners, the state-owned energy group Enel and France Télécom [FTE.PA], over the past three years. The competition commissioner, Italian-born Mario Monti, has asked the government to provide details of capital increases in Wind totalling EUR520 million by Enel. If the return from the increases is expected to be less than if the money were invested elsewhere, the aid could be deemed illegal. Monti is also investigating a 15-year contract entitling Wind to the exclusive use of Enel’s 10,000km fibre-optic network at less than market rates and a EUR826 million ten-year loan from France Télécom in 2000. Enel’s acquisition of fixed line operator Infostrada from Vodafone in 2001, which was subsequently merged with Wind, is also under the spotlight.

The Italian government has until the end of the month to reply to the allegations, though a decision is not expected until later in the year. If the Commission concludes that Wind was given unfair advantage it is likely to force the telco to repay the aid. The investigation is expected to put even greater strain on the relationship between Brussels and the centre-right Italian government led by media mogul Silvio Berlusconi. Both the Commission and the Italian government declined to comment yesterday.

CIT's Datafile of European Telecommunications