Two governments go shopping: Italy's state moves to own the phone network, Britain seizes its last steelworks

A post office bids for a phone company

On its face, the weekend’s biggest deal makes no sense. A post office — the people who deliver your letters and pay your pension — is offering roughly $15 billion for a phone company. And Britain just paid to take over a steelworks that was losing money, from an owner who presumably wanted rid of it.

If you judge these the way you’d judge any takeover — will the buyer earn back what it paid? — they look like mistakes. A private buyer with only profit in mind would walk away from both.

But a private buyer with only profit in mind isn’t who’s bidding. And once you see who is, the deals stop looking foolish. They’re answering a different question.

Two ways to price the same thing

There are two ways to put a value on a company, and they usually disagree.

The first is the market’s way: what will it earn? Add up the future profits, subtract what it costs to run, and you get a number. This is how almost every deal you read about is judged. It’s why a loss-making steelworks is “worth” very little — it takes in less than it spends.

The second is the country’s way: what do we lose if this fails, or falls into the wrong hands? A nation that can’t make its own steel has to buy it from someone else — and that someone can raise the price, or simply stop selling, in a crisis. A nation whose phone and computing networks are owned abroad has handed a stranger a switch. This value doesn’t show up in any profit line. It shows up only when the thing is gone.

When a state buys a strategic asset, it’s paying the second number, not the first. That’s why Italy’s state-owned post office can rationally pay billions for a phone network, and why Britain will spend public money to keep a furnace lit that no private owner wants. The price looks too high because you’re reading it against the wrong scale.

Paying too much on purpose

Think of it as insurance, not investment.

Nobody expects their house insurance to “pay off.” You hope you never collect. You pay anyway, because the thing it protects against — losing the house — is worse than the premium. You are deliberately paying more than the expected return, and it is still the sensible move.

A government nationalising steel, or bringing a telecoms network in-house, is buying that kind of insurance. The premium is the money that will never come back as profit. What it protects against is a future where the country can’t make what it needs, or depends on a rival who knows it. Judged as an investment, it’s a loser. Judged as insurance against dependency, it can be worth every euro.

The catch is that insurance can be overbought. Not every industry is strategic. A state that “protects” a coffee brand or a fashion label the way it protects steel and power is just wasting public money on something the market would supply fine on its own.

Who decides what’s strategic

Here is the part that hides in plain sight. Whether an industry counts as “too important to leave to the market” is not a fact. It’s a decision — made by particular people, at a particular moment, in the country’s name.

Steel and computing networks feel obviously strategic today. But that label is a choice, and choices have interests behind them. Protecting a domestic steelworks keeps thousands of jobs and a defence supply chain at home — a real public good. It can also keep an inefficient company alive at taxpayers’ expense, shielded from competitors who’d do it cheaper. Both things are true at once. The word “strategic” does honest work and convenient work in the same breath, and from the outside they look identical.

So when a government calls something strategic and reaches for public money, the useful question isn’t “is it strategic?” — everything can be dressed that way. It’s: who gains from this being kept in-house, and who pays?

Ownership is a lever

There’s one more turn. The moment a state takes control of something others depend on, that control becomes a bargaining chip.

Watch China’s response to Britain nationalising a Chinese-owned steelmaker: not a shrug, but a warning that it will “take measures.” Ownership of a strategic asset isn’t just defensive. It’s leverage — a thing you can grant, withhold, or threaten in every other argument you’re having. That’s exactly why nations want these assets in their own hands, and exactly why taking them from someone else provokes a reaction. Control of what people depend on is power, and power is never given up quietly.

What this makes of us

It’s tempting to read all this as distant — governments and billions, nothing to do with you. It isn’t.

The money for the steelworks is public money: yours. The pension that post office pays is yours. The network these deals redraw carries your calls, your bank login, your day. When a government decides an industry is too important to lose and spends to keep it, it’s placing a bet on your behalf — buying insurance you didn’t choose, against a dependency you may not have known you had.

And nobody sitting at any one desk can be sure the bet is right. The minister can’t prove the steelworks will matter in a crisis that hasn’t come. The critic can’t prove it won’t. What looks like a bad deal on the profit line may be cheap protection, or expensive vanity, and often you only learn which one long after the cheque clears. Seeing that doesn’t make you cynical about the deal. It makes you hold your verdict — and the government’s — a little more loosely.