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

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  • Massimo FLORIO

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 .

Suggested Citation

  • Massimo FLORIO, 2007. "Telecom Italia 1997-2007: a case study in privatization failures," Departmental Working Papers 2007-19, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2007-19
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    File URL: http://wp.demm.unimi.it/files/wp/2007/DEMM-2007_019wp.pdf
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    More about this item

    Keywords

    Telecom Italia; Privatization; Corporate Government;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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