Ringing out the cash

14 March 2006

Tronchetti looks pretty comfortable, for now. But if Prodi wins the Italian elections, he may yet face political counterwinds. He is shoring up the highlygeared cascade through which he controls TI by extracting a bumper dividend and floating Pirelli s tyres arm.

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Pirelli said net debt at the end of 2005 had declined to E1.2bn. The conglomerate through which Marco Tronchetti Provera controls Telecom Italia, plans to list its tyres unit by summer 2006. It will only sell a minority stake. It also plans to sell E400m of minority stakes in listed companies such as Capitalia and Mediobanca.

Telecom Italia has announced that it is upping the dividend on its ordinary shares by 28% to E0.14 per share. Olimpia, the highly leveraged vehicle that sits on top of the Italian telecoms group, will receive E337m.

Intesa and Unicredit, the two Italian banks which together hold 9.5% of Olimpia, can exercise an option to sell their stakes back to Pirelli for around E1.2bn in September 2006.

Romano Prodi, the centreleft candidate to be the next prime minister, has trained his sights on monopolies. Telecom Italia's independent directors replied in an open letter that the group now operates in a fully competitive regime.

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