Wind Blows Hot on Italian 3G

September 15, 2004 - source: BWCS

Enel the Italian electricity utility company is said to be mulling over buying extra capacity in the Italian 3G market. The power company is reportedly putting together an offer for Ipse, the Italian national 3G licence holder which has yet to launch a service, or indeed build a network.

According to reports in the country's financial press Enel would use some of Ipse's frequencies for its own mobile operator Wind, while renting other chunks out to rival Italian mobile service providers TIM, and Vodafone. The purchase, should it go ahead, will apparently cost Enel somewhere between euros 200 million and euros 280 million. The power group has admitted an interest but says it has not yet made a decision on buying Ipse.

The Italian government took the unusual step of awarding five 3G licences in October 2000. At the time, Ipse, 30% backed by Telefonica of Spain, paid US$2 billion for a next generation mobile phone franchise. Enel is a major backer of Wind, which itself paid US$2.01 billion for a 3G licence in the 2000 auction. In 2001, the government extended the validity of the licences to 20 years from the original 15.

If the sale goes through, press reports claim that Enel would benefit from a tax- write-off of euros 900 million thanks to Ipse's euros 2.3 billion in losses.