European Comment: Wind blows in a wrong direction

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Enel shares rose on Tuesday at the chance of selling Wind, the Italian utility's debt-laden telecoms unit, but one's heart sinks at the possibility of it going to a consortium led by 81-year-old Cesare Romiti. The Romitis once wielded power at Fiat, Mediobanca and Corriere della Sera newspaper but, like other business dynasties, have lost their lustre.

Driving the share price is hope the bid will exceed the €4bn value analysts put on Wind and take on its €6.6bn debt. More significant for Italy is what new owners could do for telecoms competition. Wind has nearly 20 per cent of the mobile market but only 10 per cent of fixed-line, where it struggles to compete with Telecom Italia.

Mr Romiti was a tough chairman of Fiat in the 1980s and 1990s but benefited from quotas on Japanese cars and state help for the home market - unlikely to be available to Wind. His family businesses have attracted unwelcome attention.

In June, the Romitis were ousted from RCS MediaGroup, the publisher, after shareholders complained about the way Mr Romiti's son Maurizio ran the company. Impregilo, the construction company where the Romitis are biggest shareholder and another son, Pier Giorgio, is chief executive, is being investigated for possible false accounting.

Prosecutors are looking at the way a loan to a subsidiary, now in liquidation, was booked. Impregilo says it was valued correctly. Even without this problem, the indebted company has to raise up to €1bn in new capital and loans next year when €550m of bonds fall due for payment. Plenty for the Romitis to attend to, one might think, without venturing into telecoms.

Atomic attractions

The Paris-based International Energy Agency has used uncharacteristically strong language to warn Europe of the risks of becoming over-dependent on Russian natural gas. With North Sea supplies shrinking and the once abundant Lacq field in south-western France long depleted, Europe will rely mainly on Russia for about 80 per cent of its gas needs over the next 30 years.

Worse, it will become increasingly dependent on a single powerful Russian monopolistic supplier, Gazprom, with every interest in squeezing prices higher. Hence, the IEA's call for urgent steps to diversify not only Europe's suppliers but supply routes, currently heavily concentrated in Ukraine.

One solution is to increase foreign supplies of liquefied natural gas and coal. But energy experts argue this would constitute only a temporary alternative given electricity consumption is expected to double by 2050 while CO2 emissions will have to be reduced by half.

So it is hardly surprising to see a revival of interest in nuclear energy. After Finland's decision to build Europe's first new nuclear plant in more than a decade, France has now chosen the first site for a new generation reactor to replace eventually its 58 ageing nuclear plants.

Rather than campaigning to ensure the plant was built elsewhere, French regions actively competed for the new reactor, underlining the shift of sentiment. This too has prompted Paris to partially privatise its nuclear champion Areva next year. The atom is making a slow comeback.

French revolution

Nicolas Sarkozy's reign at France's finance ministry brought mixed results, but one gain is a series of reports promoting labour market reform. On top of the Camdessus report, which highlighted a "work deficit" caused by the 35-hour week, structural rigidities and an ageing demographic profile, comes a new tome urging deregulation of service jobs.

Pierre Cahuc and Francis Kramarz, academic economists, say France could create millions of jobs by issuing extra licences for hoteliers, hairdressers, accountants, taxi drivers and architects and simplifying training programmes. As Mr Kramarz points out, many regulations are designed to protect producers and employees rather than create new jobs or lower prices. Therein lies the difficulty. Deregulation is often resisted by politicians and trade unions defending vested interests.

Jean-Louis Borloo, the employment minister, who commissioned the report with Mr Sarkozy, promises a "great revolution". Let him be as good as his word.

european.comment@ft.com

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