Sometimes it is enough to change the boss for a company to resurrect. It was like this at Fiat. Eight years ago Sergio Marchionne inherited a technically bankrupt Fiat and, despite the misunderstandings that his strategy continues to arouse in Italy, he has once again made it a world player. But business cases are not always the same: many bosses have changed in Alitalia but the airline has never recovered. In Telecom Italia it would be nice to think that this is enough replace Bernabè driving to relaunch the group. But that's totally unlikely to happen. Unless three conditions are triggered that largely Telco's block shareholders have so far denied to the outgoing president to the point of causing him to resign.
Telecom Italia can also open an international tender to find the best manager in the world in the telecommunications field but will never be able to find the way to relaunch if it does not resolve three key problems: a development strategy, recapitalization and a new governance.
Let's start from the last point, which is the least explored but is perhaps the crucial one. Here there is a problem as big as a house which has contributed not a little to derailing Bernabè's management. Who really commands in Telecom? The numbers show that the group is substantially a public company because the market holds 85% of the total capital (including savings shares), but reality shows that the absolute master of Telecom is Telco (the block of shareholders made up of Telefonica, Mediobanca, Generali and Intesa Sanpaolo, with the last three outgoing partners) which holds 22,4% of the ordinary share capital. You don't need to be a specialist to understand that we are dealing with a completely unbalanced governance and in which, for example, Marco Fossati's Findim, which holds 5% of Telecom, has no representation in the corporate bodies. The times of the so-called post-privatisation Telecom hard core are long gone, but the situation is not very different and it is time for it to change and align itself with international best practices.
Then there is the no less decisive problem of the strategy. In his management Bernabè, not having new financial resources available and having inherited six years ago a debt of over 35 billion euros which he reduced to just over 28 despite making 25 billion investments, tried to juggle between maintaining the assets South Americans (Brazil in the lead), which fuel the group's profits, and the effort, which proved to be insufficient, to relaunch Telecom's presence on the domestic market. To win this second challenge, especially in the mobile sector, it would have been necessary to eliminate one of the too many competitors who are shattering mobile telephony in Italy: either by buying H3G, which has always been at a loss but with a significant market share, or by focusing on Fastweb, which by chance Vodafone has also targeted its fixed network. Bernabè attempted integration with H3G but the claims of the Chinese parent company caused the negotiations to fail in the bud. The lack of available capital did the rest.
Now Telefonica, which is preparing to become Telecom's reference shareholder if the problem of securing the network is resolved and the antitrust issues in Brazil are ironed out, is planning to change tack. Via Tim Brasil from Telecom Italia to raise cash and not trip over the Brazilian antitrust legislation and the spotlight on the development of Telecom in Italy. It is a strategy that has its own logic, even if it impoverishes Telecom's international horizon, but which has to be verified in the field.
However, one thing is certain and we thus arrive at the second of the three points in question, which is certainly not the least important: without new capital the new Telecom cannot hope to win. To enhance the network, beyond its corporate location, and to face increasingly fierce competition that has strengthened and expanded with the Over the Top (Google in primis), money is needed. Strategy and governance are essential but without capital there is no going anywhere and instead there is the risk of taking the very dangerous slope of downgrading, which endangers the sustainability of the debt. The era of Bernabè crashed on recapitalization. We will soon understand if the new kings of Telecom will be able to change the music.
Read the previous articles by director Franco Locatelli on the Telecom Italia case:
https://www.firstonline.info/a/2013/09/25/telecom-non-e-come-alitalia-o-ansaldo-la-differenz/8b85d308-f592-40b7-8235-e1c7c92e6d0f
https://www.firstonline.info/a/2013/09/28/politica-miope-e-capitalismo-senza-capitali-questa/4d82c77c-2b24-46da-be14-c2e0f6e6edd3
