ITALY is in advanced talks with Elon Musk’s SpaceX for a deal to provide secure telecommunications for the nation’s government – the largest such project in Europe, sources with knowledge of the matter said on Sunday (Dec 5).
Discussions are ongoing, and a final agreement on the five-year contract has not been reached, said the sources, who asked not to be identified citing confidential discussions. The project has already been approved by Italy’s Intelligence Services as well as Italy’s Defense Ministry, they said.
The negotiations, which had stalled until recently, appeared to move forward after Italian Prime Minister Giorgia Meloni visited president-elect Donald Trump in Florida on Saturday.
Italian officials have been negotiating on a 1.5 billion euros (S$2.1 billion) deal aimed at supplying Italy with a full range of top-level encryption for telephone and Internet services used by the government, the sources said.
The plan also includes communications services for the Italian military in the Mediterranean area as well as the rollout of so-called direct-to-cell satellite services in Italy for use in emergencies such as terror attacks or natural disasters, they said.
The possible deal has been under review since mid-2023. It’s been opposed by some Italian officials concerned about how the services may detract from local carriers.
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Representatives from the Italian government and SpaceX did not immediately respond to requests for comment made outside regular business hours.
In 2024 alone, Musk’s SpaceX has added more than 20 nations from Ghana to Argentina to its Starlink satellite Internet service. It now serves more than four million people in 100-plus countries and territories, blanketing the globe with broadband services, pushing out legacy telecom operators and outpacing fresh challenges from Amazon.com and nation-state rivals such as China.
Late last year, Kyivstar PJSC, Ukraine’s largest mobile operator, signed a deal with Starlink to introduce satellite-powered cellular service in a bid to place telecom infrastructure beyond the reach of Russian attacks.
SpaceX offers its Starlink service for commercial applications ranging from residential Internet service to maritime shipping and airlines, and is also developing a product called Starshield for defence and sensitive uses.
It’s conquering the global satellite communications market thanks to a powerful mix of technology leaps and shrewd business manoeuvring, as well as Musk’s growing political clout.
Italy is one of the world’s most competitive markets for phone carriers, which have been struggling for years with shrinking profits. The local industry is facing a fresh round of mergers as well as multi-billionaire asset disposals.
Last year Telecom Italia, the country’s former phone monopoly, sold its landline network to the US private equity firm KKR & Co in a 22 billion euros deal with the goal of slashing its debt pile. The grid sale was the first of its kind for a European phone company, and it was strongly backed by Meloni government.
Italy considers telecommunications as a strategic asset.
The government holds stakes in both Telecom Italia and in the new KKR-owned phone network company called FiberCop. In addition, Italy controls FiberCop’s smaller rival Open Fiber.
Italy is among the countries already serviced by Starlink, which delivers broadband Internet through its network of more than 7,000 SpaceX satellites. Last year, Starlink claimed that Telecom Italia was obstructing the rollout of its high-speed Internet services.
The Italian government was reviewing alternatives to Musk’s Starlink option, including the EU’s Satellite Constellation Company IRIS² as well as building its own satellite constellation, the sources said. In both cases, the projects’ cost would have outpaced 10 billion euros, they added.
In his first term, Trump often portrayed himself on the world stage as a sort of salesman-in-chief for American business interests. He often used high-level meetings with counterparts to secure commitments to buy US arms or invest in US factories. BLOOMBERG
