Interview with the CEO of FS Italiane Group Renato Mazzoncini on Repubblica

"Our mission is to modernise the country. We are at the cutting-edge of technology, together with Anas we will succeed"

Below is an interview conducted by Fabio Bogo with Renato Mazzoncini, the CEO Ferrovie dello Stato Italiane published in on 19.06.2016.

Railways? Not just trains and tracks. The mission which the Italian Ministry of Infrastructures and Works entrusted to CEO Renato Mazzoncini was to make it become the new engine for the country’s mobility. An integrated road and rail network with faster and more modern means, a network of smart-stations, a merger with Anas in order to design and build the infrastructures required for the leap towards modernisation.

I must say Engineer, Mr Mazzoncini, the project is ambitious. You will need resources. How will you find them?
"We have already begun to do so. In six months we have concluded two major operations. The first one was the sale of the mains power network to Terna, which raised 750 million euro. Our 8700 high voltage kilometres now cover 15% of the civil and domestic production requirements. The second was the sale of Grandi Stazioni Retail with a tender won by Borletti and Fondo Antin, the best of as many as 4 offers. We cashed in 423 million, in total this transaction was worth 20 times the EBITDA; this proves that today activities integrated into the rail system gain great value. Grandi Stazioni was an extraordinary operation for us: we obtained an excellent capital gain and we were able to rewrite the system’s architecture. Private individuals have bought the rights to use Grandi Stazioni Retail’s spaces; they believe in the future cash flows generated by commercial activities within the stations. Selling clothes or shoes is not our job. Running the stations is, and they remain the property of Italian Railways with Grandi Stazioni Retail, and manage services for passengers starting with safety, information and cleaning. We have larger projects in mind for this and for other fronts. We cashed in and this together with the issue of new bonds for 1.8 billion means we now have the resources for these objectives".

Tell us what they are.

"To begin with, the renewal of our fleet. The new high-speed Frecciarossa 1000, trains which can reach 400 km/h and at the moment are being tested at night between Rome and Naples, are increasing. We've pushed them up to 385 km/h, our goal is a top commercial speed of 350 km/h. This means that Rome and Milan will only be 2 hours and 20 minutes apart. We'll have 50 of them. But the bulk of the investment will be for the regional system, where we intend to make a breakthrough, because we have 50 million passengers travelling on the Frecce, but 600 million on the regional lines. During the last three years we have replaced 25% of all regional trains and six months ago we announced the biggest train invitation to tender ever in the history the country; the base was 4.5 billion and it covers high and medium capacity trains. This tender will close in the coming weeks, we plan to purchase vehicles totalling 50% of the national fleet which will start operating between 2018 and 2020. At the end of this operation, 75% of the fleet will be new and Ferrovie dello Stato will represent the European benchmark. It will be a revolution and the necessary investment will be huge; at the same time, we will review the service agreements with the various Regions in order to properly plan their needs".

This is on the trains’ front. And the rest?
"Infrastructures. We will start with the stations, which in Italy are 2200. Those with a retail value, which could become large shopping centres, are about twenty. We want to change the idea of the station. Today a car driver says: "I’ll drive, I’m not taking the train between Brescia and Milan because I have to go to the station and waste time". In our projects, stations will save you time, because that is where you will find all the services you need. The possibility of picking up your online fresh product shopping in customised store areas, of mail boxes for ecommerce and deliveries, of a laundry, a barber shop. Even small stations will be able to supply a set of standard services for commuters. Stations will save you time and will encourage you to use the train. These activities, both in large and in small stations, are an extraordinary leverage for us. As the concession expires in 2040, the new shareholders of Grandi Stazioni will have to make investments in a hurry: I think we will see the benefits, both for them and for us, in a year or two. All thanks to the speed and the cohesion of the board of directors which is on schedule and to the great competence and dedication by all the company staff. We closed very important operations in six months. On June 28th, Grandi Stazioni Retail will close, two days in advance of schedule."

All this could help the planned privatisation process. How is it proceeding?
"The business plan that we are preparing for September will also propose a solution for the IPO. But we will not sell our company to the private sector. We will list it on the Stock Exchange and the listing will be a way to maintain, for example, the objectives of the industrial project. We're working on it, but it’s too early to decide. The important thing is to understand which is our target market".
The merger with Anas makes it clear that railways alone are not enough. Rumour has it that you are the type who would like to buy everything. So much so that you are even interested in Atac.
"Should our market only consist of railways then we're ok, we have 90% and little to do but to defend our borders. But if it is mobility, then we only have 5%. I don’t think this is good. Today 85% of people travels by car. We have basically 30 million "owner-drivers" of personal transportation who buy a vehicle, run it, service it and drive it. The question is: how do we get them out of the car?  We can attack this market by providing door to door integrated mobility solutions, integrating rail and road, car and bike sharing, taxis and other forms of mobility, with dedicated apps and integrated pricing".

I insist. Atac as well?
"Mobility in Rome, with 4 million customers, is very interesting indeed. And not just for us. We are waiting for the new administration; a tender must be called by 2019. We will be there. Atac means men and rolling stock most of all. I do not think it will be too difficult to heal it. Investments, new material and giving the workers an industrial perspective is what is needed: if you explain the business plan to the people clearly, their reaction will be positive and you will be able to give back to Rome the dignity of a service which is now lost. We’ll find a way. We did it in Florence, in three years: social peace and promises kept. It is a scheme which can be repeated".

You are thinking of buying the Greek Railways as well. Is it a good deal?
"I think so, a great opportunity that we hope to grasp. The route Athens - Thessaloniki is like the Rome-Milan one. If the Greeks drive, it is because they have no viable alternative. We are living in a European dimension and we have to behave coherently. Ferrovie dello Stato has a 14% turnover abroad, the Germans 40%. It is unthinkable to operate on the home market only, we must expand. We have projects in Iran, where they want a high-speed link and we have offered ourselves as general contractor in order to export our country’s extensive railway expertise, and we are beginning to test the Indian market: one of our exploratory missions is there at the moment".

Do you need Anas to grow?
“"Ferrovie is one of the few companies in the country which could grow even more, it is the back bone structure of mobility and it stands on the edge of a boundless prairie on which to move: 95% of the passenger market, 98% of the freight market. We need Anas, it is a very important company; it has a lot of problems, but it remains strategically important. Italian Railways has a 9 billion turnover, the French 31 and the Germans 43. Why? Because they have grown both at home and abroad. Deutsche Bahn is the second European road transport player. We feel like dwarves compared with the others. I have no ambitions to take care of 100% of the transport and logistics. But we need strong players here. In Sweden, they are beginning to think of electrified motorways. When we see these things, we understand that the difference between motorway and railway will decrease in the future. Ferrovie has evolved over the years driven by the technological progress of the rolling stock, roads are at a technological prehistoric level. Something is now changing, for example with the autopilot. Armani’s Anas does not have the technology to do this now, we've got it with RFI. By creating an infrastructure hub of mobility, we can make significant synergies, planning roads and railways together, running for tenders, putting together the back office. And together we are stronger abroad. Tomorrow’s basic transport infrastructure will be rail and road, we must walk together and create one of the most cutting-edge forces of the country".

Do your joint-ventures foresee the Messina Strait bridge as well?
"It is an integrated infrastructure, it would be a mistake to only think of it as a road issue, there is no traffic that justifies it. But if the Bridge was designed as within a corridor, and we know for certain that it costs half the Brenner, then it is different. If it is a rail work, and the road becomes ancillary, the funding mechanisms are different. 6 million people live in Sicily, 4 in Puglia. This is the South, Naples, now 1 hour and 7 minutes from Rome has already become a Centre. Either we join the South to the rest of the country or the problem of the South will never be solved".