Collapse of the prices, competition wanton, investments unsustainable, profitability lower and lower, cut of theoccupation: the status of Italian telecommunications, until twenty years ago one of the flagships of the national economy, is now a case in Europe. Which must also make regulators reflect, whose drive towards hyper-competitiveness on prices – sensational cases of H3G before and of Iliad now – with respect to the quality of the service and the creation of value as a function of sustainable investments ended up putting the Italian telecommunications industry on the ropes, above all from a financial point of view.
The figures speak for themselves and are merciless: between the 2012 and the 2018 the major telecommunications companies operating in Italy they lost about 7 billion euros in revenues, despite the strong growth in data traffic on both fixed and mobile networks. Particularly impressed mobile, which in 2018 saw a reduction in revenues of over 900 million and hit its lowest level since 2014. Blame the price collapse and the high investments made.
The dynamics of prices leaves little room for Italian TLCs: not only are they on average lower than those of the main European countries but are also in contrast with the prices of other utilities, which between 2012 and 2018 instead continued on the upward path. On the other hand, the prices of TLCs in Italy have constantly dropped and are well above the European average.
But as prices plummeted, the investments of the Italian telecommunications companies went up, until reaching the highest value in the last 2018 years in 10: 7 billion euros (one of the highest values in the entire historical series), to which must be added 1,9 billion euros of disbursements on licenses, which add up a further 5,3 billion euros in the next few years for 5G licenses and the financial commitment necessary to support the development of the network.
It goes without saying that between the collapse of prices and the growth of investment spending, the profitability of Italian telecommunications is in a nosedive, so much so that – against 90 billion euros invested – the return is only 2 billion, equal to 2,1% return on invested capital, a level that stands below the cost of money.
It is therefore not surprising that, in addition to the company financial statements, it is also the employment that between 2012 and 2018 lost the beauty of 8 thousand employees.
There are currently no signs of a turning point on the horizon and the risk that the entire sector will end up weakening further is very concrete.
The first danger of an objectively unsustainable situation is the further reduction of employment, because the hypothesis that companies are further forced to rationalize – read: cut – the workforce is anything but far-fetched. Compared to a total of 118.700 employees in the entire telecommunications chain in 2018, there was a drop of 1,4% and the trend does not seem destined to reverse course, despite the reduction of the workforce in the sector has already been 8 thousand units in 6 years.
The second danger concerns the decline in investments in both innovation and maintenance, with deleterious effects on the quality of the services offered to customers. The sharp contraction in the ability to generate cash, which in 10 years has recorded a decrease from 10 billion in cash to a negative cash flow, thus makes new investments increasingly less sustainable.
Finally, the unsatisfactory state of Italian telecommunications could lead foreign investors to reduce their presence in Italy endangering the construction of strategic infrastructures for our country. But it could also dissuade potential new foreign investors from entering the Italian telecommunications market.
Compared to a situation in the sector that is, to say the least, pitiless, one would expect politics - starting with the Government - to strike a blow, but so far there is no sign of it and there is a strong doubt that the public power has not yet clearly perceived the state of emergency of the Italian telecommunications.
