MILAN (Reuters) - Telecom Italia (MI:TLIT) said on Tuesday any single broadband network should be controlled by a vertically-integrated player since a wholesale-only model had been "a failure" whenever applied.
Italy's biggest phone group was responding to questions posed by a group of small investors ahead of a shareholder meeting this week.
Telecom Italia (TIM) has been in talks for months over a merger of its fibre network assets with those of Open Fiber, controlled by utility Enel (MI:ENEI) and state lender Cassa Depositi e Prestiti (CDP).
TIM, itself partly owned by CDP, is a vertically integrated player with its own retail clients while Open Fiber's wholesale only model offers access to operators under the same conditions.
TIM chief executive Luigi Gubitosi has always said a tie-up with Open Fiber is the most efficient solution to provide Italy with the modern broadband infrastructure the government is keen to have.
But differences over several issues, including governance and regulation have so far hampered an agreement.
Telecom Italia does not want to give up control of any single network while Open Fiber says control in the hands of a vertically-integrated group would not get past EU regulators.
TIM, which said that rolling out separate networks made little sense due to the high cost involved, claimed that "wholesale only" networks had proved a failure wherever they had been tried.
"We're ready to talk to the government and (watchdog) AGCOM about regulated models like RAB (regulated asset base) providing value for our shareholders is safeguarded," it said.
Sources have previously said that TIM's top shareholder French media group Vivendi (PA:VIV) and No. 3 investor Elliott, both agree the group should keep control of any future venture with Open Fiber.
The U.S. investment fund recently cut its stake in the phone incumbent to 6.97% from a previous 9.72%. TIM said, in reply to a question, this move would have no impact on its governance.
Asked about the decision to reintroduce a dividend despite high debt levels, TIM said debt reduction remained the key priority.
"The distribution of a dividend does not interfere with this aim," it said.