The Italian government is in advanced negotiations with Elon Musk’s SpaceX for a €1.5 billion deal to secure telecommunications services, focusing on encrypted communications for government and military use. Reports suggest that the project, initially reviewed in mid-2023, is nearing finalization after gaining support from Italy’s Intelligence Services and Defence Ministry.
The proposed five-year contract would leverage SpaceX’s Starlink satellite network to enhance Italy’s cybersecurity infrastructure. However, the agreement has sparked controversy, with local telecommunications providers voicing opposition due to concerns over regulatory compliance and market competition.
Italian telecom companies, led by the lobby group Assetel, have raised objections, calling for stricter regulations on low-orbit satellite broadband services like Starlink. They argue that SpaceX’s direct-to-consumer sales model undermines existing regulatory frameworks and bypasses domestic operators.
Assetel has emphasized the need for safeguards to ensure that sensitive data remains stored within Italy’s borders. Critics also highlight that Starlink’s services compete directly with local operators, further threatening a sector already burdened by high debt and shrinking revenues.
Telecom Italia SpA, for instance, reported €8 billion in net debt in the third quarter, despite offloading its network to U.S. private equity firm KKR & Co. for €22 billion. Similarly, Swisscom AG acquired Vodafone Italia for €8 billion in December, following Vodafone’s €739 million after-tax loss earlier in 2024.
Italy has been struggling to meet broadband expansion targets set under the European Union-funded Recovery Plan. With government debt-to-GDP ratios at 137% by mid-2024, the country relies heavily on €194.4 billion in EU recovery grants and loans. However, only €113.5 billion has been disbursed so far, and delays in infrastructure spending threaten growth targets.
The broadband rollout program, crucial for economic growth, has fallen behind schedule. Open Fiber and FiberCorp, responsible for deploying high-speed internet, have only cabled a third of the 3.4 million buildings targeted under the €3.4 billion plan. In response, the government has explored leveraging Starlink to address these delays and expand coverage more rapidly.
SpaceX has been rapidly expanding its satellite network, with 20 new Starlink satellites launched in December, bringing its total to 6,700 active satellites in orbit. Its services now cover more than 100 countries, reaching four million customers, including 55,000 in Italy.
The company’s satellite-to-cellphone internet technology offers a competitive edge in providing high-speed connectivity to remote and underserved areas, a capability that appeals to Italy’s government as it works to modernize its digital infrastructure.
Prime Minister Giorgia Meloni’s recent visit to President-elect Donald Trump is believed to have influenced the deal’s progress, as Musk’s ties to Trump could help secure favorable terms. The agreement also aligns with Italy’s broader goals of enhancing national security and technological sovereignty amid increasing global cybersecurity threats.
The partnership with SpaceX could bolster Italy’s standing as a technological hub while strengthening its ties with the United States. However, it also raises questions about the balance between fostering innovation and protecting local industries.
While the finalization of the deal is expected later this year, ongoing debates about regulatory oversight and data security may shape its implementation.
