SpaceX’s proposed services could include encrypting telephone and internet communications used by the Italian government and military. The deal has been under consideration since mid-2023, but faces opposition from local carriers.
advertisementThe Italian government is negotiating a €1.5 billion communications security services contract with Elon Musk’s SpaceX. The development follows Prime Minister Giorgia Meloni’s visit to Florida to welcome President-elect Donald Trump, Bloomberg reports.
The five-year deal has not yet been finalized, but Musk’s support for Trump could accelerate talks between the parties. The Italian Intelligence Service and the Ministry of Defense have reportedly approved the project.
SpaceX’s proposed services could include encrypting telephone and internet communications used by the Italian government and military. The deal has been under consideration since mid-2023, but faces opposition from local carriers.
Local rivals oppose the deal
In November, lobby group Assetel called for a review of regulations governing broadband operations on low-orbit satellites. The group expressed concern about SpaceX’s business model, which could circumvent existing rules by selling consumer devices directly to customers.
Acetel also stressed that Starlink’s services are in direct competition with local carriers and called on the government to impose regulations requiring sensitive data to be stored domestically.
Italian carriers are struggling with rising debt and shrinking profits due to intense price competition. For example, Telecom Italia SpA posted net debt (after leases) of €8 billion in the third quarter, despite selling its network to US private equity firm KKR & Co. in a government-backed deal worth €22 billion. Reported.
Meanwhile, Swisscom AG completed its acquisition of Vodafone Italia for 8 billion euros in December, as Vodafone’s Italian arm faces continued financial challenges. Vodafone reported an after-tax loss of 739 million euros in the six months to September.
Italy faces challenges in meeting EU-funded industrial targets
The Italian government is exploring ways to support local industry to meet broadband network targets set under a European Union-funded recovery plan.
Italy had the second-highest government debt-to-GDP ratio at 137% at the end of the second quarter of 2024. The country is set to receive €194.4 billion in low-cost loans and grants from the Recovery and Resilience Facility (RRF) by 2026. However, Italy’s economy is expected to lose traction towards meeting its growth targets, with disbursements of the 113.5 billion euros in already secured recovery funds falling behind schedule.
Broadband network projects are a key element of Italy’s infrastructure spending plan aimed at boosting the economy. In November, Reuters reported that Italy’s Cabinet Secretary Alessio Butti said the government was considering using Starlink to make up for delays piled up by the companies responsible for Italy’s high-speed internet rollout program. It was reported.
Local operators, including Open Firber and rival FiberCorp, currently cable only about a third of the 3.4 million buildings covered by the 3.4 billion euro plan.
Expanding SpaceX’s global presence
In December, Elon Musk’s SpaceX announced it had launched 20 new Starlink satellites and completed the first orbital shell for its innovative satellite-to-mobile internet service. The aerospace company added more than 20 countries to its Starlink satellite internet service in 2024. Starlink operates 6,700 satellites in orbit around the Earth, and its broadband services serve more than 4 million customers in more than 100 countries around the world. Italy currently has around 55,000 customers, served by 7,000 SpaceX satellites.
