ROME (Reuters) - Telecom Italia (MILAN:TLIT) has signed an agreement with Swisscom unit Fastweb to test technologies that can bring ultra high speed broadband connections into Italian households using copper wires.
Telecom Italia's current investment plan is centered on upgrading its existing network and the company has been resisting calls by government officials to develop a wholly new fiber optic network.
"We want to exploit all our capabilities to increase the speed of the network," Telecom Italia's chairman, Giuseppe Recchi, said on Tuesday on the sidelines of an event in Rome, confirming earlier reports by Italian media of the deal with Fastweb.
The announcement comes only two days before a Telecom Italia board meeting to approve its latest results which is also expected to decide on whether to go ahead with talks to buy a stake in partly state-owned broadband network provider Metroweb.
Metroweb is seen as a key player in realizing a 12 billion-euro ($13.5 billion) project approved by the government in March to bring super-fast internet services to 85 percent of Italy's consumers within the next six years.
In March the government of Prime Minister Matteo Renzi approved plans to upgrade Italy's notoriously patchy internet infrastructure to bring it into line with European Union targets intended to expand high speed broadband networks.
While all sides acknowledge the need to upgrade Italy's ageing copper wire network, the cost of installing a completely new fiber-optic network over a short period of time has alarmed operators.
Talks concerning the government's broadband plan and the role of Metroweb, which has also attracted interest from Vodafone (NASDAQ:VOD), involve a wide range of issues, including technology choices, regulation, and governance.
Sources close to the matter said last month that Cassa Depositi e Presiti (CDP), owner of the state's stake in Metroweb, had rejected a proposal by Telecom Italia to gradually take over full ownership.
CDP had been hoping to bring Telecom Italia on board along with other operators like Vodafone, something the former monopoly phone company is not willing to accept.
Telecom Italia's chairman, Giuseppe Recchi, said the technology deal with Fastweb had nothing to do with discussions concerning Metroweb.