Telecom: everything must go
The sale of Telecom Italia comes after years of losses: a good reason to undersell, losing an important asset of telecommunication industry. With no intervention of public authority and local investors.
Different reports on the recent industrial activity in Italy have often offered contradictory results. Important journals as Il Sole 24 Ore, Il Fatto Quotidiano and Rischio Calcolato however agreed on facts happening in Telecom Italia; and a reason exists. The actual acquisition by the Spanish company Telefonica refers not to Telecom Italia, but Telco, the holding now controlling Telecom. Telco remains nowadays one of the fundamental intermediaries controlling important enterprises in the country. What’s in Telco? Almost everything. A brilliant essay written by the Center for New Patterns of Development (I Mercanti della Notizia, 2011) reports some of investors. Among them the most important insurance group in Italy, Generali (30,7%) and an important bank as Intesa Sanpaolo (12%). No complete information about shareholders could be found, but an article reveals other actors having responsibilities in Telecom: Mediobanca (11,2%) and Telefonica (46%). That’s the point: responsibilities.
By owning a company valued 42 billion dollars, investors brought Telecom on the brink. The actual situation (a profit marginal of -14,95%) is only the warning light of its development over the years. In 2000 the shares were exchanged at 6, in 2012 at 0,60 (here the entire trend). Such a tendency is not controvertible. What happened? Giorgio Meletti on Il Fatto Quotidiano could be revealing on reality: “After having contented the control of the company during 16 years, Mediobanca, Intesa and Generali gave it to the Spanish society […] for pennies. Telefonica – however – will spend nothing for a direct competitor”. Nobody knows how Telefonica will behave. A well known practice brought other important enterprises to acquire and let fail other companies, in order to assure their own monopoly. On the other hand, Telefonica has an important portion of shareholding in Telco (45%). Consequently, such a strategy – buy and sink – would have been already used, if they wanted so. The only responsibility that Telefonica owns is the one of a financial disaster. A disaster creating losses for 4,7 billions (2011). Where 500 millions are enough to control the most important telecommunication company in the country.
Now Telefonica will own the 66% of shares, sold by Generali, Mediobanca and Intesa Sanpaolo. It’s Italian capitalism discovering the lack of capitals, but also the end of the paradigm of relationship as the exclusive way to obtain power. For those who will understand it, this is the end of banks controlling industry, industry asking for the help of politicians, politicians owning banks. Now, the function of Telefonica will be the one of recapitalizing Telecom, raising its share price from 0,6 to 1. It could seem nothing, but it means million of euros. Considering the debt owned by Telefonica – 66,8 billions – such a strategy looks difficult. And the acquisition becomes highly suspect. Will Telefonica use a decreasing liquidity to save Telecom, or is the Italian company an empty box created in order to be acquired and sunk?
Photo: Boch/Flickr
Empty Walls 