It can’t rain all the time!
Telecom Italia is one of the companies with the biggest debts with a share value that has crashed down to 1.391 euro, a forecast of zero growth in the next 2 years, the worst activity on the Stock Market in its sector. In 1999 Telecom, would have been able to buy Vodafone and perhaps even Telefonica, its probable future owner.
Bernabè, its current CEO, was sent away by D’Alema who made a gift of the country’s biggest company to the “captains courageous” using the mechanism of the leveraged buyout. It had a nice ring. It meant that Telecom was bought using debts. Colaninno and Gnutti didn’t have the money and they got the company into debt so as to be able to buy it. In this way the merchant banker D’Alema sent up in smoke the country’s greatest asset.
It would have still been possible to save Telecom if in 2001 the unhappy Tronchetti had not arrived on the scene. If the “captains courageous” still had rags on their backsides, he just had one of Afef’s used thongs. Tronchetti became the boss of Telecom with the complicity of the banks with only 0.11% ownership. The way he managed it reminds you of Attila. Externalise. Sell. Sell off parts of the company, from Telespazio to the foreign subsidiaries (while the competitors were investing in the emerging countries) and cutting the services so as to distribute the profits, stock options and the highest salaries in the sector in Europe. The Telecom security division has ended up in prison for spying (the men Tronchetti trusted), while Adamo Bove, who was collaborating with the Milan prosecutors, slid off a fly over. But this is a story that I will come back to.
Yesterday we got to a first epilogue in this colossal destruction of value with the interview of Bernabè to The Financial Times and the announcement of the sacking of 5,000 people for a starter. The rest of the meal will be much more weighty. Bernabè said that he will cut structural costs by 40% in the next few years. How many employees is that equivalent to? Ten thousand? Twenty thousand? Bernabè has a hot potato in his hands. If he doesn’t sack people, he’ll end up like Alitalia. But the tens of thousands of families who will end up in the streets (or who are already in the streets) who will they have to thank?
When Tronchetti ended his extraordinary adventure in Telecom he said: “If you look at the Pirelli results, it perhaps wasn’t worth having the Telecom adventure. But the professional balance is positive.” The professional balance is that of the management, of Ruggiero (17.277 million € 2007) to Buora (11.94 million € 2007), now a director of Impregilo (sic), to that of Tronchetti in particular. Pirelli-Telecom has in fact been worth to him 295 million € from 1999 to 2007 in stock options and salary.
Buora, in response to a question about maxi-pay packets, replied that he is completely indifferent: “It doesn’t interest me.”
It does however, interest me. And I believe that it’s of interest to all those who have been sacked and who will be sacked. I believe that it’s of interest to their families, to the mortgages that they will no longer be able to pay, to their offspring to be fed. I believe that it is of great, of vast interest, for the thousands of Italians to know about the motives why the Telecom managers got richer and yet they were destroying the company. An interest of such proportions to deserve a class action against the previous Board of Directors of Telecom.
Every person who has been sacked and who wants to join in can write to the blog.
It can’t rain all the time!