The following text is a transcription of Mr Vito Gamberale’s speech on the occasion of the Convention organised by ASATI (the Association of Telecom Italia’s small shareholders). As underlined by Mr Vito Gamberale himself, he participated on his own behalf and not as CEO at F2i – Fondi italiani per le infrastrutture.
In the Nineties, Vito Gamberale played in fact a key role in the establishment and success of TIM – Telecom Italia Mobile as a world leader in the mobile telephone sector. Mr Gamberale held in fact prominent positions within Telecom Italia, such as Director General at Telecom Italia and CEO at SIP and, afterwards, at Telecom Italia Mobile.
The event took place on December 4, 2013 in Rome.
First of all, I want to point out that I am speaking on my own behalf and I think I am fully entitled to talk since, together with many others who are in this room, I can proudly say to have made Telecom great. I claim this pride and this history and I am here to give a contribution so that this issue does not turn out badly, as many others in our Country, which did due to a distraction of the political class.
I want to express a few concepts, since I believe it is more important to share very few concepts rather than technical details.
Telecom Italia has a unique function for our Country. There is no other important Country in Europe and elsewhere where the incumbent has such an important and unique role as it has in Italy. In other countries where there are cable TV operators, broadband has developed from cable TV, since incumbents have always been a little lazy as to broadband and have followed TV operators.
In Italy, there are no cable TV operators, so Telecom’s network is the only route through which the Country can have the broadband. This appears to me as a first truth. I have heard excellent Mr Opilio say that in some areas there are three, but in my opinion this discussion seems to evoke the Catholic virtue needed to believe in the Holy Ghost, one in three, since the three are not there. Since they are accidentally present in some areas, but not in the whole Country. And where some of them are present, it is just because they have been funded by the State. So the government needs to take charge of this problem, since the Country’s evolution, an evolution that has not a promising future, passes through Telecom Italia’s network. [at this point, Mr Vito Gamberale refers to the previous speech by Mr Franco Bernabé, stating to have positively welcomed the comparison with 1993’s TAV]. Here, we are at a much more advanced state than TAV was in 1993, since for instance we all know that now, with the upcoming soccer world cup due in seven months, there will be 4k TV and for sure only very few Italians will be able to see it in Milan, while the rest of Italy will definitely not. At that time the evolution gap of our Country will emerge.
Then, a weird rumour has it that Telecom Italia needs an industrial partner, but these are managerial companies, they have been managerial companies all over the world and also in Italy. It is not clear why Telefonica should become the one that leads us by hand.
Nowadays, in this company we have three main partners: Telefonica, the three Italian partners and Mr Fossati. Then we have the so-called floating stock. But…Telefonica has a fifty billion debt. Have you ever seen a company with a larger debt restore another one with a smaller one?
I think, since Spanish do so, that Spanish create troubles at home and then try to solve their financial troubles by making others pay for them. This happened in 2006 when I opposed Abertis’ entrance in Autostrade. I paid with the exit from Autostrade, but I think I can claim the credit if Autostrade’s cash flow – €2,5bn – was not used to pay the debts of the large constructions company controlled by Abertis. When this company has a reference partner like Telefonica, as it is, cash pooling will be chosen, namely cash centralization, and at that moment Telecom’s cash will be centralized with Telefonica’s one and will serve to pay the debts Telefonica has already developed, rather than to make investments in the Country. I consider this fact heralds even more negative consequences, since it cannot be concealed that in the Mediterranean area there is actually a competition between Italy and Spain as to which is the Mediterranean reference. And I fear this operation may serve to stop Italy’s technological development in favour of Spain. So, once again, we would have paid Spain’s economic development with the cash flow produced by Telecom Italia, putting the uncertain future of Italy’s technological development into Spain’s hands.
I do not believe in merges among European incumbents either, since Europe is quite different from the USA. I have always considered the Americans a little rough, since they take leaps forward, but, contrarily to the Europeans, in their mistakes they always have the courage to go back.
Late in the ‘90s, slightly after 1995, first the Americans had made us understand that community phone operators could be a possibility. Afterwards, they realised it was a huge nonsense and backtracked, opting again for very few operators. This happened because they are a united country, as their name itself shows.
Europe is not united. Europe is only united by a currency and by borders, but as to all the rest it is divided. Thus, a merge between two operators, where one leads and the other follows, will surely not be a merge allowing a balanced development of services and, consequently, an equal technological evolution. Just think to something that nowadays is quite underestimated. In Germany elections took place more than one month ago. Instead of attending talk shows, instead of fighting or confronting each other, the two parties retreated to define a shared programme. A shared point of the programme is to introduce highway tolls for non-German cars…Thus, Europe is this. We are not united, and I think governments should consider this, since we must all believe in the Euro, but only if the European Union goes ahead, otherwise I think there is a problem. I thus believe that Telecom needs a business safeguard and development plan.
Business safeguard: Telecom paid a dumping operation by a fourth mobile operator. In no other country in the world an operator, at a loss for 15 years, would have been allowed to set the market price and I do not see why in Germany with 90 million inhabitants there are three operators, while in Italy with 60 million there are four. In Italy there should be two, so much so that the third and the fourth are struggling, and sometimes merges among operators are reported. Thus, the market must be protected from dumping, it must be protected from the over-the-tops, since this is the only pan-European safeguard that must be brought forward, in order to prevent the over-the-tops to enter the network, use it, clog it up, exploit it without paying for it. They are like Southern farmers who steal water from the public aqueduct without paying for it. It is just the same, there is no difference.
Secondly, a broadband development is needed, for which however an increase in social capital is necessary. I think that in Italy there are capitals. There is a great availability of capitals, undoubtedly for a serious project that safeguards and strengthens business, invests on broadband, emancipates the country. There would definitely be capitals in Italy and worldwide to accompany all this, all that is needed.
We must remind that Telecom still has the highest EDITDA margin in Europe, is still the most profitable company in Europe among incumbents. Instead, one’s own patrimonial weakness is mistaken for economic weakness. It is not so. This debt does not come from management problems, but derives from what Telecom’s builders perceive as real rapes. The first was Telecom’s leverage buyout, the second was Tim’s leverage buyout. Telecom is paying this serious problem, not its faults, but the faults of those who passed through it to plunder and not to manage. Because, if we, when we were there, had done a hundredth part of what those who passed through Telecom did, we would all be in jail and our children should have gone abroad jabbed at as the children of Telecom’s rapists.
For Italy, broadband is thus needed, whose advanced model is definitely that of Metroweb in Milan. I think that a collaboration between the Metroweb model, Metroweb’s shareholders and Telecom Italia should be encouraged for the broadband diffusion. The title [Mr Vito Gamberale refers to the title of the ASATI convention] says “public company”. Let’s say it honestly, when Telecom was a public company it was the great Telecom, Italy’s never perceived pride, since Italy’s problem is that it does not perceive the assets it has and lets them be destroyed in the general negligence. If other countries had had Telecom or TAV, they would have waved them as flags and thus I, too, share Franco’s feeling [here, again, Mr Vito Gamberale refers to the previous speech by Mr Franco Barnabé] about the fact that being here in our mother IRI nearly heralds hope, since IRI was not an offence to the Country. It was, only when this company turned from a public company to a personal company. Since, only when it became a personal company, it suffered these rapes.
Then, there are other two categories of partners: the three Italian institutional financial partners, for which I have a lot of respect both as institutions and as people leading them. However, for sure, I – better, we all – have the impression they are behaving as those who have a seriously sick person at home and say “let’s kick him out of here”, since he has been sick for a long time and this is annoying. However, they paid 2,70 against the current 0,7, so they have already had their loss. Could this loss ever be zeroed? And I think they, too, should be concerned of the country’s future through Telecom, since in 10 years a Country without broadband will have repercussions on the business of these three subjects. Do you think that the largest bank in the country, the largest insurance company in the country will not be affected? The last partner is Mr Fossati. Mr Fossati is the only citizen who put 1,5bn without taking anything as the others who come to take do. He put it and is the only one to have designed a project on which is fair to discuss and debate. The only partner who presented a project, I am not aware of any other partner having brought a project.
I have thought this ASATI gathering can be compared, on a smaller scale, to the gathering of the forty thousand people for Fiat on October, 14, 1980, since those forty thousand people defended the company, and to me today ASATI is taking charge of defending Telecom and I think there are the same conditions of thirty years ago to defend this company. And, at the time, the government understood something was going on. I wish this government understood, since with Telecom, frankly, in the past the government has always turned away, as if it did not have to see the disgrace going on. Today, the government cannot turn away, since to me it would be really absurd. I am convinced that the privatization of Telecom was done in good faith by the rulers. I think that at the time, urged by Europe, they took the larger one and what was considered the best in the country as a partner. That was an act of faith turned out bad, but it would be absurd that, started negatively, it ends negatively. And coincidentally, it just so happens that once again it would be a left government to do that. It would be really bitter for the Country, so I think and hope that this ASATI gathering can be a real appeal to the Government. I really appreciated the article by Mrs Olivieri on Sole 24 Ore. Here, Telefonica with its first two moves has already shown the outset. With Telecom Argentina it has already shown what it wants to do. Two moves against Telecom and in its own favour. I think there should be all the conditions of political mobilization and sensitization in the Country, not to say “no to foreigners” but rather to say “let’s give Telecom back to someone who can manage it” since, as a wise person used to say, “they went back to the past and progress came”
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