Italy

Telecom Italia’s new boss faces old challenges

19 November 2018

Luigi Gubitosi has replaced Amos Genish as head of the Italian telco. With backing from activist investor Elliott, he will try to engineer a complex network breakup and sell assets. But bitter opposition from 24 pct shareholder Vivendi will make the strategy hard to execute.

Europe can play a waiting game with Italian rebels

16 November 2018

Italy’s anti-austerity budget flouts Brussels’ fiscal rules. Declaring Rome in breach and imposing penalties would fuel euro scepticism ahead of key European elections. Better to tone down the rhetoric, and let a slowing economy and hostile markets weaken the executive’s hand.

CEO exit will escalate Telecom Italia brawl

13 November 2018

The board’s decision to sack Amos Genish reflects heightened tensions between activist Elliott and top shareholder Vivendi over the Italian telco’s future. Their next battle will be over the mooted breakup of the group. With competition at home, the timing could hardly be worse.

Italian group bank rescue is self-preservation act

12 November 2018

A vehicle funded by the country’s lenders is spearheading a 400 mln euro rescue plan for ailing Carige. A private sector bailout avoids using taxpayers’ money and should not clash with EU state aid rules. It’s a sensible way to minimise the risk of banking contagion.

Writedown speeds reckoning for Telecom Italia boss

9 November 2018

A 2 bln euro goodwill charge dragged the Italian telco into the red in the third quarter, overshadowing a resilient operating performance. The group will also bust a debt target. The row between investors Vivendi and Elliott looks increasingly likely to force out CEO Amos Genish.

UniCredit’s dividend hopes start to fade

8 November 2018

Italy’s top bank by assets used a relatively strong third-quarter performance to do some kitchen sinking, with an 850 mln euro impairment on its Turkish assets. Yet it was also forced to lower its guidance on solvency. A pleasant dividend surprise next year looks less likely.

Intesa’s gold star now comes with ECB glitter

6 November 2018

Italy’s biggest lender by value’s nine-month net profit is its best since 2008, despite a domestic bonds selloff. Solvency is also higher than required by Intesa’s Frankfurt regulator even after a stress test. That makes it the only Italian commercial bank with dividend headroom.

Ferrari boss’s cautious driving has merit

5 November 2018

Investors punished new CEO Louis Camilleri in August for calling his predecessor’s targets "aspirational". Ferrari’s rising EBITDA margin arguably warrants a more stringent target. Yet trade war fears and volatile Chinese regulation mean Camilleri is right to exercise caution.

Hitachi clinches honourable Italy truce with Singer

29 October 2018

The Japanese giant is paying 12.7 euros a share to Elliott and others to buy out rail-signal group Ansaldo. After a two-year saga, the activist’s boss Paul Singer has secured a better deal. But Hitachi’s scope for further deals in a changing rail sector means it also gains.

Mediobanca is lender of choice for rare Italy bulls

25 October 2018

The Milan bank is proving almost immune to a domestic bond market rout and has few bad loans. Hence it can probably take market share from battered Italian peers. For those few bank investors who are Italy enthusiasts, a lowly valuation makes Mediobanca the sanest way to buy in.

Gucci owner is unreliable beacon for luxury sector

24 October 2018

Kering’s upbeat view on Chinese demand sparked a rally in high-end stocks. But the group has so far been less vulnerable to economic swings than rivals thanks to its social media savvy. And the outlook for spending may be less rosy if China’s consumer confidence is any guide.

New threats cloud Benetton’s lasting legacy

23 October 2018

Gilberto Benetton led the Italian group’s diversification from garments into concessions. His vision protected the business from the threat of globalisation. But even seemingly stable assets like infrastructure, as the Genoa bridge tragedy shows, can hide great perils.

KKR throws autos shareholders into a spin

22 October 2018

The buyout group is paying $7.1 billion for a Fiat Chrysler-owned supplier. The double-digit earnings multiple is a coup for new FCA CEO Mike Manley. The big premium to where the industry trades needs some justifying. But regular investors may also be too gloomy about the sector.

Italy tries risky EU gamble on budget

19 October 2018

The radical government wants to boost spending despite Brussels’ opposition. Lengthy procedures mean the spat will drag on until European Parliament elections in May. With radical parties gaining ground, the new Commission could be more lenient. But markets won’t wait that long.

Telecom Italia’s discount is only partly deserved

17 October 2018

A costly spectrum auction and woes in Brazil have driven the telco’s stock near historic lows. Squabbling investors and Italian political worries are also a concern. But if TIM can contain rival Iliad’s assault at home, its discount to European peers looks too steep.

Italy tries more state medicine to heal Alitalia

12 October 2018

The radical government wants the finance ministry and local railways to support a 2 bln euro rescue for the ailing airline. State involvement may scare off potential international partners and make it harder to cut costs. Taxpayers would once again bear the costs of failure.

Bank woes put Italy’s radicals on the spot

11 October 2018

Worsening investor sentiment caused by the new government’s fiscal binge is hurting the country’s banks. The weakest ones, like Carige, need capital, but may struggle to raise it. Either rescuing a bank or shutting it down would be politically toxic.

Italy botches useful fiscal boost

5 October 2018

The radical government wants to ramp up spending in defiance of Europe’s fiscal rules. The country could use a stimulus but the case is being undermined by rosy growth forecasts and inflammatory rhetoric from Rome. That spells more tensions with Brussels and bond markets.

Italy’s 5G auction is an $8 billion smash-and-grab

3 October 2018

The cash-strapped country raised more money than expected thanks to the canny way it sold mobile spectrum. The consequences are for others. If operators raise prices, it’s effectively a stealth tax. If they can’t, there will be less cash to build new networks in Europe.

Fiat car-parts sale needs private equity mechanics

3 October 2018

The carmaker may spin off or sell its Magneti Marelli unit. Handing it to shareholders would let them keep any upside. But the outlook for parts makers is mixed, and valuations low. Selling to the likes of KKR makes more sense, even if CEO Mike Manley has to accept a price cut.