As some European governments are reducing shares in domestic operators, others are actively raising their stakes, often to protect strategic national assets
The Italian Government has strengthened its interest in TIM as rumours of impending consolidation circle
On 15 February 2025, Poste Italiane – the largest postal distribution network in Italy – announced that its Board of Directors had approved the acquisition of a 9.81% stake in TIM from Cassa Depositi e Prestiti (CDP), the national development bank. In parallel, Poste Italiane will sell its 3.78% shareholding in fintech company Nexi to CDP, using the proceeds plus cash to fund the TIM deal. The Government has a significant financial interest in both CDP and Poste Italiane via the Ministry of Economy and Finance (MEF), which owns over 80% of CDP and close to 30% of Poste Italiane. In turn, CDP holds 35% of the capital of Poste Italiane, bolstering the state’s control over the country’s leading postal service provider. According to Poste Italiane, its strategic investment in TIM evolves the commercial relationship between the two firms, with negotiations at an advanced stage for Postepay (which operates MVNO PosteMobile) to gain access to TIM’s mobile network. It states that the transaction, which makes Poste Italiane TIM’s second largest shareholder after Vivendi, will also create synergies between the companies and promote the consolidation of the telecoms market in Italy – something that Iliad is reportedly interested in doing through a merger of Iliad Italia and TIM’s retail-level ‘ServCo’.
An expert group has once again urged the German Government to relinquish its shares in Deutsche Telekom
In Germany, the Monopolies Commission has published nine recommendations for the next Federal Government, which will be decided following elections on 23 February. According to the Commission (an independent expert committee that advises the Government and legislature on competition policy, law and regulation), there is a need for significant reform in Germany and Europe, and politicians must set the conditions so that companies – presumably domestic ones – can be internationally competitive. The Monopolies Commission has recommended that the Government sells its 27.8% stake (of which 13.83% is direct and 13.97% indirect via KfW) in Deutsche Telekom. While the indirect stake was reduced by KfW in 2024, the Commission believes that the remaining holdings result in a conflict of interest between the goal to create fair competition and the state’s interest in the operator’s financial performance. It also considers that the Government's involvement also has a positive effect on the creditworthiness of Deutsche Telekom and therefore on its refinancing conditions compared to competitors, which distorts competition. Telecoms and media industry group the VATM has welcomed the recommendation, stating that a complete privatisation of Deutsche Telekom is urgently needed to resolve the “unwholesome collision of interests of the state as shareholder, regulator and legislator". Citing competition as the key to Germany and Europe regaining competitiveness, the Monopolies Commission recommends that the Government sells its entire stake in the former incumbent, using the financial resources released from the sale for infrastructure investment.
Several European governments retain a stake in former incumbents, with the Spanish state recently moving to partly renationalise Telefónica
The idea that the German Government should reduce, if not offload, its stake in Deutsche Telekom is nothing new. In December 2013, the Monopolies Commission urged the state to sell its direct and indirect stake in the operator, suggesting that proceeds from privatisation could help fund broadband expansion. The expert group has regularly repeated these calls in subsequent years, consistently arguing that it could be problematic that the Government exercises influence over sectoral regulation while owning a substantial amount of a major player in the telecoms market. However, the fact that European governments retain a stake in their former national incumbents is fairly common – see Proximus in Belgium, Orange in France or Telenor in Norway, for example. Similar to the situation in Italy, the Spanish Government – via state-owned industrial holding company Sociedad Estatal de Participaciones Industriales (SEPI) – has taken a 10% stake in Telefónica. This was done to counter an investment by Saudi Arabia’s STC, which now holds 9.97% of Telefónica and is looking for a board seat. As our research identified, other operators, including e& and Liberty Global, have also made investments into their peers, with international expansion, business restructuring and the lure of potentially undervalued shares often cited as key motivations.
