Italian corporates: Meloni’s turn to ride the not-so-merry-go-round

Fans of such searing Italian screen classics as ‘La Strada’ care little for the cosy charms of ‘Groundhog Day’. Yet the Hollywood time loop comedy has greater relevance for many Italian businesses. Their turnround efforts have been as continual and unsuccessful as weatherman Bill Murray’s dates with producer Andie MacDowell.

Foreign investors hope new prime minister Giorgia Meloni will be bold in ending these longstanding sagas. Bitter experience is tempering their expectations.

Business headlines feature the usual suspects. ITA, the airline formerly known as Alitalia, has been nationalised and is seeking a buyer. Telecom Italia Mobile, labouring under the debt load of past acquisitions, is embroiled in a longstanding attempt to merge its grid with Open Fiber. Monte dei Paschi di Siena is proceeding with the most vital capital raising since the last one.

These soap operas are expressions of Italy’s peculiar take on capitalism. Jobs are rigorously protected and M&A is correspondingly rare. That has fostered subscale, strategically challenged groups with bloated cost bases and lean and hungry rivals.

Consolidation is required. ITA needs to join an international network of long-haul routes. MPS should plug into a bigger banking network. Two broadband grids only makes sense to duplicate employees.

The chances of Meloni’s new government seizing the nettle?

ITA is a lighter version of Alitalia, having dropped ballast en route. But privatisation momentum has stalled alongside talks with Delta-KLM and private equity group Certares. Monte dei Paschi di Siena has announced 3,500 job losses, but potential acquirers remain wary. Over at Telecom Italia Mobile, shareholders in Open Fiber have just asked for an extension to make an offer.

A change of government always brings uncertainty. Given the regularity of that occurrence in Italy, uncertainty is the only thing you can bank on. The flipside of Meloni’s reassuringly moderate line on purely political issues is that she is unlikely to prove radical on state ownership.

Her successor can also expect to wrestle with an airline, a Sienese bank and a couple of telecom networks.