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« Telecom Italia may well be run from Rome, it specializes in Florentine intrigues »

Vu on the other side of the Alps, the small problems of Orange, in search of a new boss since the resignation of Stéphane Richard, must seem quite trivial. The latter remained all the same ten years at the head of the first French operator, when his Italian counterparts from Telecom Italia marched in tight ranks: no less than five bosses in five years.

The latest, Luigi Gubitosi, appointed in 2018, is expected to resign shortly. He himself announced it, Thursday, November 25, officially to promote the takeover of the company by the American fund KKR. The latter has indeed offered to buy the former Italian national operator for 10.8 billion euros.

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An operation that would appeal to Mr. Gubitosi, but not to all shareholders, at least not at this price. Because, if the company holds a form of record in terms of turnover of CEOs, this is the consequence of the inconstancy of its shareholders. They too follow one another at a steady pace. The group may be based in Rome and Milan, but they specialize in Florentine intrigues. Privatized in 1997, it was successively controlled by the computer company Olivetti, the boss of Pirelli Marco Tronchetti Provera, the Spanish Telefonica, the French Vivendi, the American fund Elliott …

Huge potential

So many ambitious people holding only a controlling minority and entering into variable geometry agreements with the elite of Italian finance and with the State, which has always retained shares in the affair. The result of this cacophonous governance, an erratic strategy, a deteriorated financial situation and a bottomed stock market price, which has collapsed by two-thirds since the arrival of Vivendi in 2015.

Failing to find the martingale to get out of this mess, the French, for the moment opposed to the offensive of KKR, nevertheless holds the key to the future of the group. There remains one card to play for Telecom Italia, that of broadband Internet. When on average 60% of European households are connected to optical fiber, this is the case for only a quarter of Italian subscribers. The potential is enormous, and the government of Mario Draghi has made this one of its investment priorities.

However, in addition to the largesse from Brussels, he needs private money to quickly and massively deploy the network. KKR has come for just that. The President of the Italian Council, a former investment banker, might be tempted to find a solution that suits everyone. But at the cost of new strategic turns and changes of shareholders which, until now, have not been successful at Telecom Italia.

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