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MILAN, April 13 (Reuters) - Telecom Italia has signed an agreement with Italy's biggest regional utility A2A to help it roll out its ultrafast broadband network, two sources said on Thursday, as it squares up to rival Enel .
Telecom Italia will rent Milan-based A2A's existing pipe infrastructure to help cut the costs of laying fibre, the sources said.
"Telecom Italia is keen to develop the business model and extend it to other local utilities," one of the sources said, adding the company had also held talks with Rome-based utility Acea and Bologna's Hera.
The utilities declined to comment.
The move comes as power utility Enel steps up plans to develop its own nationwide fibre network using the pipes and pylons of its distribution grid.
Last year Enel set up OpEn Fiber which includes state lender Cassa Depositi e Prestiti as a shareholder.
The Italian government sees the development of an ultrafast internet network as a top priority to modernise the country's phone infrastructure and to support business.
It enlisted the help of state-controlled Enel to speed up the roll-out after accusing Telecom Italia of dragging its feet.
Telecom Italia, whose biggest shareholder is French media group Vivendi, has pledged to spend 5 billion euros ($5.3 billion) over the next three years to speed up its broadband plans.
It recently said it was looking for a partner to help it fund development of the network in economically non-viable areas of the country.
$1 = 0.9398 euros Reporting by Stephen Jewkes; editing by Jason Neely