Steering Telecom Italia With a Steady Hand

In April 2007, as the global economy was beginning to unravel, Telefónica, the Spanish telecommunications company, led a group of Italian investors who bought a 22.4 percent stake in Telecom Italia, one of the pioneering mobile operators in Europe. The purchase was sanctioned by the Italian government, which wanted to preserve a modicum of Italian influence over its former monopoly, a big employer saddled with a load of major problems.

The biggest was Telecom Italia’s €37 billion, or $49 billion, debt, a legacy of the operator’s two leveraged buyouts in 1999 and 2001. But in a sense, the European deal was sealed in America. Thirty-seven years earlier, the Telefónica executive chairman and chief executive, César Alierta, and Telecom Italia’s then-chairman, Gabriele Galateri di Genola, met while getting master’s degrees in business at Columbia University in New York. Their friendship made the tricky cross-border deal possible, said Franco Bernabè, who has been Telecom Italia’s chief executive since 2007 and who, in April, also became its executive chairman, succeeding Galateri di Genola.