Italy nears €1.5B deal with SpaceX for secure telecommunications

Italy is reportedly in advanced talks with Elon Musk’s SpaceX to establish a €1.5 billion ($1.55 billion) deal for providing secure telecommunications to the Italian government, marking what is described as the largest project of its kind in Europe.

According to sources cited by Bloomberg, the project has already received approval from Italy’s Intelligence Services and Defense Ministry. After a period of stalled negotiations, progress was said to be made following Italian Prime Minister Giorgia Meloni’s visit with President-elect Donald Trump in Florida on Saturday (Jan. 4). The deal, under review since mid-2023, has faced pushback from local telecom providers.

The agreement in the works would give Italy encryption for government phone and internet services, plus provide secure communication support for the Italian military in the Mediterranean.

This isn’t SpaceX’s first collaboration with an Italian partner. Back in June, satellite operator Telespazio teamed up with SpaceX to incorporate Starlink’s satellite network into its services. Consequently, Telespazio can now add Starlink to its global hybrid connectivity network, which combines satellite and ground-based systems to provide reliable fixed and mobile communication services worldwide. Meloni thanked Musk at the time, calling “for an ever-increasing collaboration.”

L’accordo firmato tra Telespazio e SpaceX, per la commercializzazione dei servizi Starlink in Italia, è un’ottima notizia. Auspicando una sempre maggiore collaborazione, colgo l’occasione per rivolgere le mie congratulazioni ad @ElonMusk per aver concluso con successo il test di…

— Giorgia Meloni (@GiorgiaMeloni) June 6, 2024

In November, the lobby group Assetel called for a closer look at the rules governing low-orbit satellite broadband operations. They raised concerns about SpaceX’s business model, which involves selling devices directly to customers, potentially sidestepping current regulations. Assetel also pointed out that Starlink’s services compete directly with local telecom providers and urged the government to require sensitive data to be stored within Italy.

Meanwhile, Italian telecom companies have been facing financial challenges, including growing debt and declining revenues due to fierce price competition. For example, Telecom Italia SpA reported €8 billion ($8.3 billion) in net debt (after leases) in the third quarter, even after selling its network to U.S. private equity firm KKR & Co. in a government-supported deal worth €22 billion ($22.8 billion).

Last January, ReadWrite reported that SpaceX launched its first set of direct-to-cell Starlink satellites that intend to provide “mobile connectivity anywhere on Earth.” Musk stated that the new satellites will be “a great solution for locations with no cellular connectivity.” Starlink has grown a network of roughly 5,000 satellites since 2019, becoming the world’s largest satellite operator in the world.

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