Amazon set to increase bet on Italy's digital turnaround plan

Online retailer Amazon.com is set to announce on Friday the first in a series of investments in Italy worth at least 500 million euros ($550 million), a bet on the government's plan to go from laggard to leader in digital commerce, sources said.

Amazon will invest 150 million euros to build a major storage and logistics center outside Rome, its second in Italy, said one source close to the matter. The new center, due to open next year, will employ 1,200 people.

"There are wide margins of growth for small and medium businesses in Italy, which are still very much behind their European counterparts on e-commerce," the source said.

It will be the biggest foreign IT investment to be unveiled in Italy since Prime Minister Matteo Renzi announced in April a new tactic to speed up broadband rollout across the country. He enlisted the help of state-controlled utility Enel to lay fibre-optic cable alongside its existing power network.

The European Union's fourth-largest economy comes last in the EU for Internet usage, with barely half of Italian households subscribing to fixed-line broadband.

However, online shopping is growing and will have almost doubled between 2011 and the end of this year when transactions are estimated to reach around 19 billion euros, according to national ecommerce association Netcomm.

Amazon also plans to build data centers in Italy in the next 12 months for its expanding cloud-service division, housing them in old power stations belonging to Enel, two sources said.

Enel Chief Executive Francesco Starace has said previously that Amazon is among companies interested in acquiring three old stations, following reports by newspaper Corriere della Sera.

Amazon has a share of 14 percent of Italian Internet retailing, second to eBay with 24 percent, according to research firm Euromonitor International.

It has already invested some 450 million euros in the last six years in Italy, its fourth largest European market, after the United Kingdom, Germany and France.

Amazon founder and CEO Jeff Bezos will visit Italy and is set to meet Renzi in Florence on Friday, sources said.