Italy considers 5G telecoms licence extensions with lower costs tied to investment pledges

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MILAN (Reuters) -Italy is considering extending 5G licences while limiting costs for operators in return for investment pledges, a cabinet undersecretary said on Tuesday, as the telecom sector contends with falling revenue and lower margins.

Telecoms operators are lobbying for a free extension of their 10-year licences after Italy raised 6.5 billion euros ($7.5 billion) from a 5G mobile auction in 2018 that drew ferocious bidding.

“The renewal cannot be automatic, but you know I’ve long been one of the strongest supporters of avoiding a cash-driven approach in favour of clear investment commitments,” Alessio Butti said at a business conference in Rome.

Italian telecoms operators are expected to ramp up spending in the coming years to upgrade 5G mobile networks, delivering faster speeds and enabling a wide range of AI-driven applications for businesses.

Butti said that the government is working on several options that will be discussed with national telecoms regulator AGCOM. 

“The 2018 auction was disastrous, with operators caught in a bidding spiral. As a result, they were left without resources to invest,” said Butti, who oversees innovation and digital transformation policies.

Revenue at Italian telecoms operators has dropped by nearly a third since 2010 while cash generation after investment has collapsed to zero from 10.5 billion euros that year, according to data from industry lobby Asstel.

($1 = 0.8625 euros)

(Reporting by Elvira PollinaEditing by David Goodman)