Geopolitics on the rocks

Vincent Bolloré and Italian capitalism

Italy, Europe

Despite the success of some midcaps, Italian capitalism has become smaller, more confused and therefore geopolitically weaker

In April 2018, the French businessman Vincent Bolloré made the headlines, first for stepping down as chairman of the Vivendi media group to be replaced by his son Yannick, and then for being taken into custody in Nanterre due to the Bolloré Group’s alleged corrupt dealings  in Africa.

In this analysis, we will focus on Bolloré’s significant role in Italy and its meaning for the geopolitical and financial relationship between Italy and France, particularly on key companies such as Telecom, Mediobanca and Generali. In order to understand this, we need some historical perspective on Italian capitalism.


Mediobanca: representing French investors

Bolloré’s influence in Italy dates back to the early 2000s, thanks to his involvement in Mediobanca, the investment bank that played a crucial role in post-war Italy and was founded by two legendary bankers, Raffaele Mattioli and Enrico Cuccia. 

It was also thanks to the friendship between Enrico Cuccia and André Meyer, that Mediobanca developed a key relationship with the French investment bank Lazard led by Meyer, both in France and in the United States. During Cuccia’s 1980s clash with Romano Prodi, who was attempting to make him resign from Mediobanca’s board of directors, Cuccia secured his position through Lazard.

Cuccia’s protégée, Vincenzo Maranghi, was forced to resign from Mediobanca in 2003. The new agreement on Mediobanca’s complex governance included Vincent Bolloré as the reference point for French investors in general (which at the time also included Dassault and Groupama). Since 2003 Bolloré has played a key role in Mediobanca and in Generali, the insurance giant of which Mediobanca is the largest shareholder.


Standing on Bernheim’s shoulders

To understand France’s central role in European finance, one has to look at Antoine Bernheim’s career. For more than 40 years, at Lazard’s Bernheim pursued a meaningful growth strategy for French companies, particularly in the 1980s and 1990s. In 1987, the French media celebrated Raul Gardini, Silvio Berlusconi and Carlo De Benedetti as the new “condottieri” aiming to expand operations in France, emphasizing three Italian strengths: savings, entrepreneurial spirit and the expansion of Italy’s stock exchange.

While, for a series of reasons, that Italian “miracle” was short-lived, Bernheim consistently pursued his strategy, providing financial opportunities for the rise of the Bolloré Group and, more importantly, that of LVMH, the world leader in luxury goods. Bernheim developed strong bonds both with Vincent Bolloré and Bernard Arnault.

He declared, “I created them” (C’est moi qui les ai faits). Both his protégées are very relevant for Italy. LVMH represents a path not followed by Italy, which has been unable to develop a proper luxury conglomerate. Bolloré entered Italy’s financial sanctuaries at the time of Bernheim’s comeback to the chairmanship of the insurance company Generali  in 2002.

In 2010, however, Bolloré famously betrayed Bernheim, supporting Cesare Geronzi as the new chairman. According to his biographer, Bernheim said: “Vincent betrayed me. He says he supported me, but he only supported me half-heartedly.” 


The rise of Telecom Italia and its uncertainties

In 2013, Bolloré became Vivendi’s largest shareholder, aiming to “transform the company from a financial holding to an integrated company focused on content.” In his strategy leading to a “European Netflix”, Bolloré further expanded his influence in Italy looking to acquire Telecom Italia and Mediaset.

While Mediaset is controlled by the Berlusconi family, Telecom Italia has experienced many changes in management and shareholders over the past 20 years following the company’s privatization.

It is often forgotten that from 1994 to 1998 Telecom Italia experienced extraordinary international development through a series of acquisitions and partnerships in Europe, North and South America. Once again, as in the 1960s, Italy had many chances to play the role of a significant world power in communications technology. Of that unprecedented development, only TIM Brasil remains.

Over the last 20 years, Telecom Italia’s crucial predicament has concerned the role played by the Italian state. The Italian government did not pursue for this telecommunications company the same successful strategies implemented for ENI and ENEL. Such strategies involved retaining de facto control, while opening the companies to the market in terms of governance, strategy and internationalization.

In this case instead, the Treasury retained a small share (sold at the end of 2002), while giving control firstly to the Agnelli family and other investors. Control changed hands over the years, never achieving industrial and strategic stability or finding proper industrial foreign partners, looking to the US, UK, Germany, Spain, Mexico and France. T

his never-ending uncertainty, according to Vito Gamberale, the main architect of the 1990s outstanding development of Italy’s mobile technology, contributed to “the genocide of technological competences in Telecom.”


Sparkle, the perfect “critical infrastructure”

Uncertainty also loomed over the Italian state’s power on telecommunications at a national (normative and regulatory) and EU level. The “golden share” system introduced in 1994 was opposed by EU jurisprudence and replaced by a new system of “golden powers” elaborated by Enzo Moavero Milanesi, further implemented in recent years.

Meanwhile, this last decade has led to a new wave of state interventionism, also fostered by the development of new technologies which significantly broaden the scope of “critical infrastructure”.

Also due to increasing technological competition between China and the U.S., a new geopolitics of technology has neglected the naïve idea that technology is autonomous from political reality and possesses the magic power to abolish boundaries. As we wrote last year, “rather than lying in no man’s land, servers and cables are placed in a specific territory, and satellite power systems are linked to military infrastructures.”

This also applies to Telecom Italia, and particularly its network business, Telsy and Telecom Sparkle. In September 2017, Prime Minister Paolo Gentiloni emphasized the strategic role of Sparkle’s infrastructure and the government’s resolve to use “every tool allowed by the law” to defend it. Sparkle is the embodiment of the resistance of physical infrastructure in a digital world.

According to its website, it owns and manages “a global and technologically advanced proprietary network of about 530,000 km of fiber, which include three major regional systems in Europe, the Mediterranean and the Americas as well as an extensive ownership in major international submarine cables”. According to Gamberale, this is “the most critical European network, a collector of Western security.”

A new discipline of golden power, approved by the Italian government in 2017, led to litigation with Vivendi about Telecom, which hired Italy’s top expert in administrative law, Sabino Cassese, as its consultant. According to Cassese, there was no “real national security risk” for Telecom’s network and this “nationalistic stance” was dangerous.   


Was Rovati’s plan achieved by France?

During the disarray of the last 20 years, there were basically two schools of thought as far as Telecom Italia was concerned. According to the first, the market should take care of its business, government “powers” need to be abandoned in favour of strictly regulatory intervention, establishing a real public company.

According to the second, a direct or indirect presence of the state is necessary for Sparkle and Telsy, and some kind of spin-off of the network needs to be achieved generating resources for Telecom’s technological development. The “Rovati Plan”, developed by Romano Prodi’s late economic advisor in 2006, is the clearest expression of the second approach. 

A possible corollary of the Rovati Plan was that, after the spin-off of the network, an Italian “content company” could be created, with an agreement reached between Telecom and Mediaset. Basically, Bolloré tried to achieve this and while Flavio Cattaneo, an experienced Italian executive (also general manager of RAI under the Berlusconi government in the 2000s) was at the helm of Telecom, Vivendi and Bolloré signed an agreement on Mediaset Premium.

This took place in April 2016, however, that summer, while Silvio Berlusconi was recovering from heart surgery, Vivendi informed Mediaset that it did not wish to respect their agreement. Litigation followed, and Bolloré and Berlusconi battled for Mediaset’s control.


A series of strategic mistakes

In his Italian campaign, Bolloré made a series of strategic mistakes. Firstly, he underrated Berlusconi who is often portrayed in a cartoonish manner that leaves out of the picture his economic team.

There is a group of executives and bankers, including Fedele Confalonieri, Bruno Ermolli and Ennio Doris, who have come up with Berlusconi, known him for decades and will never “abandon” him. They remain relevant players in Italian capitalism and will have a say in the future of Mediobanca, along with Cristina Rossello, secretary of Mediobanca’s shareholder agreement and a member of Spafid and Mondadori’s boards of directors, also recently elected to parliament representing Forza Italia.

Although during the turmoil in Telecom in 2007 Bolloré claimed to be focusing on “Italian interests”, after his attack on Mediaset this will never be believed again. In March 2018, Mediaset announced an agreement with SKY, bypassing Vivendi for an economically and geopolitically stronger partner .

Furthermore, Bolloré underrated both the Italian state and the Gentiloni government, probably considering it weak after Renzi lost the 2016 referendum. The Gentiloni government, on the contrary, proved stronger than its predecessors in defining Italy’s national interests as far as these issues are concerned also thanks to Telecom’s relevance for Italy’s security apparatus.

Carlo Calenda, Minister of Economic Development, said on January 1st, 2017, “We must rebuild a network of large companies, public and private, and financial institutions able to move in a coordinated  manner among one another and with the government.”

Calenda was basically describing France, a country where such a “system” certainly exists, thanks to l’État actionnaire, to the education shared by executives and bureaucrats as well as the presence of powerful families in strategic sectors, such as Dassault. However, even the French system has its internal differences: there is no “coordinated monolith” including Bolloré, Bouygues, Niel, Arnault, Dassault and others.


Telecom in the geopolitics of infrastructure

After the 2018 elections in Italy, the US fund Elliott increased its share in Telecom, challenging Vivendi. This happened just a few weeks after the acquisition of the rail operator NTV by the US fund Global Infrastructure Partners, managed by Flavio Cattaneo, who, in the summer of 2017, had terminated his contract with Telecom “by mutual consent”.

In April 2018, the Cassa Depositi e Prestiti, Italy’s national promotional institution, acquired a share in the company with a long-term perspective, in line with its mission of supporting national strategic infrastructures. However, Elliott has supported the Vivendi-appointed CEO Amos Genish, whose industrial expertise in TLC is undeniable, and who is working with Deputy Chairman Franco Bernabè.

For the May showdown concerning Telecom’s board of directors, Vivendi has selected as a board member Michele Valensise, former secretary general of Italy’s Ministry of Foreign Affairs, former ambassador to Berlin and now president of Villa Vigoni, a bilateral association between Italy and Germany.

Despite uncertainty following the elections, there seems to be some form of coordination, or at least an informal minimal agreement between Italian political forces on the future of Telecom, in a situation most certainly monitored by the president of the Italian Republic.

A “French issue” has now openly emerged in Italy, where Macron’s behaviour regarding Fincantieri and his stance on migration have ended up in the same melting pot as Bolloré’s moves. Bilateral talks on the Treaty of the Quirinale between Italy and France are obviously influenced by this atmosphere, while Germany’s influence on EU countries and EU bureaucracy is not affected by Macron’s activism. 



More than 30 years have passed since the celebration of Italian ‘condottieri’ in 1987. In the meantime, Italy has emerged as a loser in post-Cold War Europe, unable to tackle its productivity issues or to exploit Telecom’s success in the 1990s. Despite the success of some midcaps, Italian capitalism has become smaller, more confused and therefore geopolitically weaker.

Nowadays, “critical infrastructure” in Europe is part of a wider technological competition between the U.S. and China on “Tech Silk Roads”. U.S. funds are playing and will play a clearer geopolitical role, to counter China’s appetite. Macron’s idea of a “Europe that protects” takes this into account, as well as the internal competition between EU states.

France wants to exploit its strengths (finance and investment banking, defence and security) to advance its interests, also building “European champions of European sovereignty” with French sovereignty at the helm. 

Even in the case of Bolloré’s waning influence on Italian capitalism, some questions remain unanswered. Will a new industrial shareholder emerge in Telecom given that Elliott is a purely financial investor? With what resources (financial capital and human capital) will Italy compete in the geopolitics of technology, particularly in sectors having strong Italian expertise, such as robotics?

Even when the ‘condottieri’ retire, Italian savings remain. In 2019, European elections will be held and a new board of directors for Generali will be appointed.

Both are relevant for the relationship between Italy and France. Generali remains the crown jewel of Habsburg Italy. Despite being significantly smaller than Germany’s Allianz and France’s AXA, it manages assets worth nearly 500 billion euros.

Recently, France acquired increased influence in Italy’s asset management arena with Amundi’s acquisition of Pioneer. Generali’s control will continue to matter in Italy’s future so as to support investments in the country, but also to defend Italy in a new crisis.

Vincenzo Maranghi’s prophecy, “Generali will go to AXA”, will therefore continue to haunt the nightmares of Italian capitalism.