By Camilla Palladino,
Hugo Dixon
How do you finance a €21 billion transaction with only €60 million to €70 million of your own money and still keep control? That's what Marco Tronchetti Provera, the Telecom Italia boss, has achieved with his take-out of the minority investors in Telecom Italia Mobile.
Securing leverage of more than 300:1 is quite a feat, even in a country that is known for its capitalism without capital. Moreover, Tronchetti has done this while simultaneously shoring up his empire's rickety financial structure. He has achieved it by borrowing a large chunk of debt, feeding cash through a complex chain of Chinese boxes and calling on powerful allies.
A chain reactionThe TI/TIM takeover has triggered a chain reaction through Tronchetti's cascade of companies. Start with the bottom of the chain: TI itself. It is financing €14.5 billion of the cost of...
