After a decade under French control, Telecom Italia SpA now has an Italian state-backed group as its top investor — and it’s one that wants to foster mergers and acquisitions in the telecoms market.
Postal service Poste Italiane SpA this weekend became the phone company’s biggest shareholder with a holding of nearly 25%, after purchasing the majority of a stake held by French media conglomerate Vivendi SE. Poste says the deal will support industry consolidation.
It’s a shape-shifting moment for a troubled carrier that was privatized nearly 30 years ago, and it comes at a time when governments from the US to Europe are taking a more active role in corporate affairs.
It also comes as Iliad SA is seeking to shake up the Italian sector through M&A, possibly by combining its local unit with Telecom Italia.
Government oversight could offer some advantages to Telecom Italia, which Rome views as a core national asset given the volume of sensitive data it handles and the strategic importance of its digital infrastructure.
Prime Minister Giorgia Meloni’s right-wing government has kept a close eye on companies it considers “national champions,” and her administration has seen Poste as a natural fit for Telecom Italia.
Still, whether state-backed Poste can succeed where private investors failed remains an open question. Telecom Italia has been a chronic underperformer for years, hobbled by a growing debt pile that forced the firm to last year sell off its landline network, its most valuable asset, in a deal valued at as much as €22 billion ($23.8 billion).
Italy has one of the world’s most competitive telecoms markets, already largely in the hands of foreign players. Domestic competitors include Swisscom AG’s Fastweb — which last year bought Vodafone Group Plc’s local unit — and CK Hutchison Holdings Ltd.’s Wind Tre SpA. Vivendi retains a 2.5% stake in Telecom Italia.
The company’s legacy as a former monopoly operator crippled it from the start through a complex mix of high labor costs and ever-higher investments. Partnering with Poste Italiane could breathe new life into Telecom Italia, possibly even giving it a chance to be a player in the next wave of sector moves. Bloomberg
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