Telecom Italia 1997-2007: a case study in privatization failures

Massimo Florio

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: This papers discusses the privatization of Telecom Italia over ten years, from divestiture to three subsequent changes of ownership control. Why has the governance of one of the most promising of the former nationalized industries been so unstable? The turn of events suggests that the evolution from public to private ownership in Italy has taken on the characteristics of a search for equilibrium in a complex game, centred around the control of rents. In crucial moments (privatization, takeovers, reorganization plans), the political system was able to choose between removing itself from the telecommunications sector, or declaring a public interest in its control. A middle path was chosen, in which the government negotiates with private interests but without a clear industrial policy. Financial operators, for their part, participate in the game in a speculative fashion, with limited means, unable to project a convincing industrial plan. This outcome was not a necessary one and, if only as a mental exercise, one can readily imagine counter-factual scenarios .

Keywords: Telecom Italia; Privatization; Corporate Government (search for similar items in EconPapers)
JEL-codes: L32 L33 L96 (search for similar items in EconPapers)
Date: 2007-05-13
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Persistent link: https://EconPapers.repec.org/RePEc:mil:wpdepa:2007-19

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