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* Enel broadband network to cover 224 cities
* Enel will be wholesale operator only
* Project equity will be open to infrastructure funds (Recasts lead, adds Enel CEO comments)
By Stephen Jewkes
MILAN, March 23 (Reuters) - Italian power utility Enel is proposing to spend around 2.5 billion euros ($2.8billion) on equipping the country's homes with fibre opticcables in a move that could put pressure on Telecom Italia to get going with its own plans for building anationwide fibre broadband network.
The state-controlled utility said on Wednesday it intends torun fibre to the home alongside its power network in over 224municipalities and wholesale the capacity to the telecomsservice providers - "any retail operator that wants to give itscustomers access".
Enel is still in talks about forming a commercialpartnership with mobile network operators Vodafone andVimpelCom's Wind but Starace said theywould not become shareholders in Enel Open Fiber (EOF), thevehicle set up to execute the project.
"EOF equity remains open to investors, but mainlyinfrastructure funds," he said.
Enel's plans, first flagged early last year, have causedsome friction with Telecom Italia, the former monopoly networkoperator, which is still putting together its own scheme toconnect the whole country up to ultrafast broadband.
The heavily indebted incumbent, whose top shareholder is nowFrench media giant Vivendi, has pledged to spend 12billion euros in Italy under its latest three-year businessplan, including 3.6 billion euros on laying fibre optic cables.
But using Enel's high-speed network could give TelecomItalia rivals a competitive edge in the race to offer fasterinternet connections, analysts said.
"It's the cheapest solution to get (fibre) to homes andfactories," Enel Chief Executive Francesco Starace told analystsin a conference call on the group's full-year results.
Enel will begin work later this year on installing a newgeneration of smart electricity meters in 33 million Italianhomes and intends to run fibre through its pipes at the sametime.
EOF will develop the fibre network in stages, with around7.5 million homes expected to be covered in the first few years.
The project to develop a truly nationwide fibre broadbandnetwork is a top priority for Prime Minister Matteo Renzi who iskeen to get Italy's Internet connections up to speed with therest of Europe and close 'the digital divide' to give a boost toa sluggish economy.
Starace, who has put networks and grids at the core ofEnel's business strategy, said anyone trying to build a fibrenetwork running all the way into consumers' homes and officeswithout taking advantage of Enel's pipes would likely spend morethan 3 billion euros on doing the same job.
Earlier this year he had said using Enel's infrastructurecould reduce costs by 30-40 percent.
($1 = 0.8935 euros) (Editing by Greg Mahlich)
