There are many but above all two reasons that have tormented the life of Telecom Italia, the largest Italian telephone company renamed Tim, since the privatization of 25 years ago until today, but the new industrial plan presented a few days ago by the CEO Peter Labriola he can mark a watershed and, if successful, initiate the raise.
First of all, let's clear the field of a misunderstanding that for many years has distorted many reflections on the decline of Telecom Italia: privatization was not the origin of its crisis, but what happened afterwards. It may be that, if there hadn't been the rush to carry out the privatizations quickly as Europe was asking Italy to admit it immediately to the euro, even the privatization of 35% of Telecom could have been done better, on the model of Eni or Enel to be clear. But it cannot be said that Italian capitalism gave great proof of foresight on the occasion of the privatization of Telecom, for which Treasury Minister Carlo Azeglio Ciampi he was forced, on behalf of the Prodi government, to knock on the doors of large private groups, often finding the door closed. But this was not the true origin of the decline. Instead, it was the 102 thousand billion lire debt tender offer launched in February 1999 by Olivetti led by the emerging entrepreneur Roberto Colaninno and supported by the Brescia finance buccaneers headed by Chicco Gnutti and by Mediobanca with the decisive support of the Prime Minister of the time Massimo D'Alema. Telecom Italia has never recovered from that deadly debt ballast and it is no coincidence that, over twenty years later, the reduction of the debt from around 20 billion euros to less than 5 billion is one of the salient objectives of the new Labriola plan .
Tim, the two main reasons for the decline: Debt tender offer and unfair competition from Big Tech
The second reason for the decline of Telecom, already mortally tied up in debt by the tender offer, is that in the meantime the competitive context of telecommunications has also changed for the worse, as just in recent days a precious Agcom document who, numbers in hand, recounted how in 10 years the big telcos – burdened by heavy investments, unrestrained competition and very poor international regulation – have been surpassed in profits and revenues by Big Tech, from Amazon to Apple and from Facebook/Meta to Google/Alphabet and Microsoft, just to mention the major ones. Certainly the problem does not concern only Telecom Italia but all the big telcos of the world (also the Chinese and American ones and not only the European ones) but it is clear that, if a telephone company, in addition to the unfavorable transformation of the industrial sector of which it is part is weighed down by a debt that takes its breath away, the possibility of excelling on the market is weakening day after day, above all if there is no industrial policy capable of responding in innovative terms to the decline of telecommunications.
In these 25 years, Telecom Italia, caught in the midst of a continuous whirlwind of managing directors and shareholders (many of whom are more rapacious than far-sighted), has given its all to complicate life, but the real causes of its crisis – it is good to say it clearly – are those indicated above: the debt takeover bid and the unregulated competition of Over The Top.
Tim and the courageous bet of the Labriola Plan
Tim's new CEO, Pietro Labriola, who knows the company like the back of his hand, is certainly the first to know that attempting to relaunch the group is a challenge that will make your wrists shake, the final outcome having the flavor of a bet. But it is sacrosanct to try and his industrial plan is going in the right direction with a mix of courage, innovation and flexibility. Taking apart a vertically integrated group like Tim by dividing it in two – the network on one side and services on the other – in the belief that individual assets are worth more than Tim's current stock market capitalization is anything but a routine operation and it is reasonable to believe that it can create more value. But then there is the future of the network that the Labriola plan boldly faces by imagining that, at the end of its transformation, the group could be left without a network or because - and this is the preferred option - Tim's will be sold to Cdp and partners to give rise to single network with Open Fiber or because, if the first option fails, it will be sold to a financial partner.
Of course, projects are one thing, even if they are well thought out, and their execution is one thing, and it is on this front that the market, which certainly would have preferred theAmerican takeover bid by KKR on all Tim, wait till you see. The match, therefore, will be long and the ending is not yet obvious but the kick-off of the Labriola plan, it must be admitted, is promising.
