Prysmian: The Hidden Infrastructure Giant Powering the Connected World

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I. Introduction & Episode Roadmap (8 minutes)

In the shadows of Europe's energy transition stands a €16 billion Italian giant most people have never heard of. Prysmian touches nearly every aspect of modern infrastructure - from the submarine cables that connect offshore wind farms to the fiber optics delivering Netflix to your living room. This is the story of how a 140-year-old cable manufacturer became the essential backbone of global electrification and digitalization.

The company's transformation mirrors the broader shifts in global infrastructure. What began as a division within tire giant Pirelli has evolved into the world's largest cable manufacturer, with operations spanning 50 countries and a order backlog of €19.1 billion as of 2025. The timing couldn't be more critical - as nations race toward net-zero targets and data consumption explodes, Prysmian finds itself at the nexus of two unstoppable megatrends.

This episode traces three pivotal inflection points that reshaped the company: the 2005 Goldman Sachs carve-out that freed it from Pirelli, the transformational Draka merger in 2011 that created a European champion, and the 2024 Encore Wire acquisition that solidified its North American dominance. Each move wasn't just about scale - it was about positioning for the infrastructure supercycle that's now unfolding.

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II. Origins: Pirelli's Industrial DNA (1879-2005) (15 minutes)

The roots of Prysmian trace back to Giovanni Battista Pirelli's vision in Milan, 1872. Young Pirelli had studied in Basel, where he encountered the nascent rubber industry. Returning to a newly unified Italy hungry for industrialization, he founded what would become one of Europe's great industrial dynasties. While Pirelli would become synonymous with racing tires, the company's cable division quietly grew into a technological powerhouse.

In the post-World War II reconstruction era, Pirelli's cables literally helped rebuild Europe. The division pioneered submarine cable technology in the 1960s, connecting Mediterranean islands to mainland grids. By the 1980s, Pirelli cables were transmitting power across continents and telecommunications across oceans. The unit developed expertise in high-voltage systems that few competitors could match.

Yet within the sprawling Pirelli conglomerate, cables always played second fiddle to the glamorous tire business. By the early 2000s, as Pirelli refocused on premium tires under CEO Marco Tronchetti Provera, the cable division's strategic importance waned. The unit generated steady cash but required substantial capital investments that competed with tire expansion plans. The stage was set for separation.

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III. The Goldman Sachs Carve-Out & Birth of Prysmian (2005) (20 minutes)

Goldman Sachs Private Equity saw opportunity where Pirelli saw distraction. In July 2005, the investment bank's private equity arm acquired Pirelli's cable and systems business for €1.3 billion, renaming it Prysmian - derived from "prism," reflecting the company's optical cable heritage. The deal represented classic private equity financial engineering: a stable, cash-generative business with consolidation potential in a fragmented industry.

The new owners immediately implemented operational improvements. They streamlined the supply chain, reduced working capital, and pushed for higher-margin products. Management, led by CEO Valerio Battista, received substantial equity stakes, aligning their interests with value creation. The transformation was swift - EBITDA margins expanded from 5% to over 7% within 18 months.

By 2007, Goldman was ready to harvest returns. The Milan IPO in May 2007, priced at €15 per share, valued the company at €2.8 billion. Goldman retained a significant stake but had already recouped most of its investment through dividends and refinancing. The newly public Prysmian emerged debt-free and acquisition-ready, just as the infrastructure boom was accelerating.

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IV. The Draka Mega-Merger: Creating a Global Champion (2010-2011) (25 minutes)

The 2008 financial crisis created unexpected opportunity. Dutch rival Draka, weakened by debt and exposure to construction markets, became vulnerable. Prysmian struck in November 2010 with a hostile €1.25 billion all-cash offer, shocking the traditionally genteel cable industry. Draka's board initially resisted, but Prysmian's €8.60 per share offer - a 48% premium - proved irresistible to shareholders.

The merger wasn't just about size. Draka brought critical telecom cable expertise that Prysmian lacked, particularly in fiber optics. The Dutch company also had strong positions in specialty cables for offshore oil platforms and renewable energy - markets poised for explosive growth. Geographic complementarity was perfect: Draka's strength in Northern Europe and Asia-Pacific filled gaps in Prysmian's Mediterranean-centric footprint.

Integration proved challenging but ultimately successful. The combined entity rationalized 15 overlapping facilities while preserving specialized capabilities. Synergies exceeded the promised €150 million, reaching €175 million by 2013. Most importantly, the merger created a new industry structure - instead of six mid-sized European players competing on price, three global champions emerged with pricing discipline.

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V. The General Cable Acquisition: Doubling Down (2017-2018) (20 minutes)

By 2017, CEO Valerio Battista saw the next consolidation wave approaching. General Cable, once America's cable giant, struggled with legacy costs and emerging market exposure. Prysmian pounced with a $3 billion offer in December 2017 - the industry's largest-ever deal. Unlike the hostile Draka takeover, this was a friendly merger acknowledging market realities.

The strategic logic was compelling. General Cable's North American industrial and construction presence perfectly complemented Prysmian's strength in utilities and telecom. The American company's rod mills provided vertical integration in copper processing. Latin American and African operations offered emerging market growth. Combined, the companies would command 20% global market share.

COVID-19 complicated integration but ultimately accelerated transformation. Unable to travel, integration teams developed digital collaboration tools that improved efficiency. Plant closures forced automation investments that boosted productivity. By 2021, the combined company had achieved $170 million in synergies while maintaining customer relationships through the pandemic disruption.

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VI. Technology Evolution & Innovation Journey (18 minutes)

The shift from copper to fiber optics transformed Prysmian's innovation trajectory. In the 1990s, the company invested heavily in optical fiber drawing towers, mastering the delicate process of transforming glass preforms into hair-thin fibers. By 2000, Prysmian could produce fibers with attenuation rates below 0.20 dB/km - pushing the physical limits of light transmission.

The real breakthrough came with P-Laser technology, unveiled in 2019. This fully recyclable cable system eliminated cross-linked polyethylene - the industry standard for 50 years but impossible to recycle. P-Laser cables maintain the same electrical performance while being completely recyclable at end-of-life. Major utilities like National Grid and Terna have already adopted the technology for critical projects.

High-voltage direct current (HVDC) submarine cables represent Prysmian's crown jewel. The company's €200 million investment in the Arco Felice plant near Naples created the world's most advanced submarine cable facility. Here, Prysmian manufactures cables capable of transmitting 3,200 MW at ±640 kV depths of 3,000 meters. Only three companies globally possess this capability, creating formidable barriers to entry.

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VII. The Energy Transition Supercycle (2020-Present) (22 minutes)

The pandemic marked an unexpected inflection point. As governments unveiled green recovery plans, infrastructure investment surged. The European Green Deal's €1 trillion commitment, America's Infrastructure Act, and China's carbon neutrality pledge created unprecedented demand. Prysmian's largest-ever contract package worth €5 billion from German TSO Amprion for 4,400 km of HVDC cables exemplified this new scale.

Offshore wind emerged as the primary growth driver. Germany's plan to install 70 GW of offshore wind by 2045 requires massive submarine cable deployments, with projects like BalWin1 and BalWin2 each transmitting up to 2 GW of wind energy from the North Sea. Prysmian's cable-laying fleet, including the new Leonardo da Vinci vessel capable of installing cables in 3,000-meter depths, provides critical installation capacity.

The data center boom added another growth vector. Hyperscale facilities require massive fiber optic deployments and specialized power cables. Prysmian's Digital Solutions division, initially weakened by telecom market softness, rebounded strongly. Digital Solutions profitability strengthened in 2024, with adjusted EBITDA rising to €161 million and margins expanding to 12.4%.

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VIII. Business Model Deep Dive (20 minutes)

Prysmian operates through three distinct but synergistic divisions. The Transmission segment (25% of revenues) focuses on submarine and high-voltage land cables for utilities. These are complex, multi-year projects with high barriers to entry. Transmission profitability reached €361 million in 2024 with margins increasing 1.7 percentage points, demonstrating the segment's pricing power.

The Power Grid and Electrification divisions (50% combined) serve distribution utilities and industrial customers. Power Grid adjusted EBITDA rose to €474 million in 2024 with margins at 13.4%. These businesses benefit from grid modernization and renewable integration, though they face more competition from regional players.

The project versus product mix critically impacts working capital. Submarine projects require 18-24 month execution but generate 15-20% EBITDA margins. Industrial cables ship within weeks but yield 8-10% margins. Prysmian's increased project exposure improved profitability but extended cash conversion cycles, requiring sophisticated treasury management.

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IX. Competitive Landscape & Market Position (15 minutes)

The cable industry has consolidated into a rational oligopoly. Nexans, Prysmian's French rival, focuses on electrification and subsea. Danish NKT specializes in offshore wind connections. Asian players like LS Cable and Sumitomo compete aggressively but lack Prysmian's installation capabilities. Chinese manufacturers dominate low-voltage commodities but struggle with high-voltage technology.

Customer concentration creates both risk and opportunity. The top 20 utilities represent 40% of Prysmian's project revenues. These relationships, built over decades, create switching costs beyond price. Utilities cannot risk project delays from unproven suppliers. Reference projects become critical - Prysmian's successful completion of the Norway-UK North Sea Link validates its capability for similar mega-projects.

Regional dynamics vary significantly. Europe's energy transition drives high-margin project demand. North America focuses on grid resilience and renewable integration. Asia-Pacific remains price-sensitive but volumes are massive. Prysmian's global footprint allows it to balance these dynamics, shifting capacity to highest-return opportunities.

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X. Financial Performance & Value Creation (18 minutes)

The transformation from a €7 billion revenue company in 2011 to €17,026 million in 2024 revenues reflects both organic growth and successful M&A. More impressive is margin expansion - adjusted EBITDA reached €1,927 million in 2024, up 18.4% with margins increasing to 11.3%.

Free cash flow of €1,011 million in 2024, up 39.6%, demonstrates exceptional cash generation. This performance enabled a 14.3% dividend increase to €0.80 per share while funding the Encore Wire acquisition. The company maintains a conservative balance sheet with net financial debt at €4,296 million, providing flexibility for further investments.

Stock performance has rewarded patient investors. From the €15 IPO price in 2007, shares reached €60+ by 2024, generating 10% annual returns plus dividends. The multiple expansion from 8x to 12x EBITDA reflects the market's recognition of Prysmian's transformation from cyclical manufacturer to infrastructure enabler.

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XI. Strategic Analysis: Porter's 5 Forces (12 minutes)

Supplier power remains manageable despite copper volatility. Prysmian's scale provides procurement advantages, while vertical integration through rod mills reduces dependence on intermediate suppliers. Raw material pass-through mechanisms in contracts mitigate commodity risk, though timing mismatches can impact quarterly results.

Buyer power varies by segment. Transmission customers wield significant influence through competitive bidding. However, Prysmian's track record and installation capabilities limit actual alternatives for complex projects. In distribution markets, fragmented customer bases and technical specifications reduce individual buyer leverage.

Substitution threats remain limited for physical infrastructure. Wireless technology cannot replace high-capacity power transmission. Satellite internet complements rather than replaces fiber backbones. The physics of power and data transmission fundamentally require cables, protecting Prysmian's core markets.

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XII. Strategic Analysis: Hamilton's 7 Powers (12 minutes)

Scale economies permeate Prysmian's business model. The Arco Felice submarine cable facility required €200 million investment - impossible to justify without Prysmian's order volume. R&D spending of €110 million annually spreads across a revenue base competitors cannot match. Procurement scale reduces material costs by 2-3% versus smaller rivals.

Cornered resources provide sustainable advantages. Prysmian's cable-laying fleet, particularly the Leonardo da Vinci, represents irreplaceable assets. The vessel cost €170 million and requires 3-year construction. Specialized engineers capable of managing 3,000-meter deep installations number perhaps 200 globally - Prysmian employs 60.

Process power emerges from decades of accumulated learning. Submarine cable jointing - connecting cable sections on the seabed - requires expertise developed over hundreds of projects. Prysmian's 99.9% joint reliability rate versus 98% industry average might seem marginal, but one failure can cost €50 million in repairs and penalties.

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XIII. Bear vs. Bull Case (15 minutes)

The bear case centers on execution risk and cyclicality. Mega-projects inherently carry delay and cost overrun potential. The German Corridor projects, while lucrative, strain Prysmian's installation capacity through 2027. Any significant failure could trigger penalties and reputation damage. Additionally, government infrastructure spending proves politically volatile - regime changes could slow the energy transition.

Competition from Chinese manufacturers intensifies annually. While they lack submarine capability today, aggressive investment could change that by 2030. Margin pressure in commodity cables continues as Asian producers accept lower returns. Technology disruption, while unlikely, remains possible - breakthrough battery technology could reduce transmission infrastructure needs.

The bull case rests on unstoppable megatrends. The energy transition isn't optional - physics demands cable infrastructure for renewable integration. Prysmian's 2028 targets include adjusted EBITDA of €2.95-3.15 billion and free cash flow of €1.5-1.7 billion, implying substantial growth from current levels. The €140 million in expected synergies from the Encore Wire acquisition within 4 years provides near-term earnings visibility.

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XIV. Playbook: Key Business Lessons (10 minutes)

Industry consolidation, executed properly, creates lasting value. Prysmian's three major acquisitions didn't just add scale - they eliminated destructive competition while preserving innovation. The key was maintaining distinct brand identities while integrating back-office functions. Customers saw continuity; shareholders saw margin expansion.

The transition from private equity to public markets offers a blueprint for similar transformations. Goldman's operational improvements created the foundation for public market success. The lesson: financial engineering without operational excellence fails, but combining both creates extraordinary outcomes.

Managing cyclicality through portfolio diversification proves essential. When telecom spending collapsed in 2023, transmission projects and grid investments compensated. Geographic diversity provided similar ballast - Asian weakness offset by American strength. The broader lesson: correlated risks compound while uncorrelated risks cancel.

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XV. Epilogue: The Next Decade (8 minutes)

The path to €25 billion revenue by 2030 appears achievable given current momentum. Grid modernization alone requires €580 billion investment in Europe and $2 trillion globally through 2030. Prysmian's positioning to capture 15-20% market share would drive substantial growth. Emerging opportunities in EV charging infrastructure, hydrogen distribution, and energy storage provide additional vectors.

Geographic expansion focuses on high-growth markets. India's power demand doubles by 2040, requiring massive transmission buildout. Southeast Asian nations are leapfrogging to renewable-based grids. Africa's electrification represents a generational opportunity. Prysmian's proven ability to execute complex projects in challenging environments provides competitive advantage.

Sustainability has evolved from compliance to competitive advantage. P-Laser recyclable cables command premium pricing. Scope 1&2 emissions decreased 37% versus 2019 baseline, exceeding targets and attracting ESG-focused investors. The company's role in enabling the energy transition transforms it from industrial manufacturer to sustainability enabler - a narrative shift that supports valuation multiples.

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XVI. Outro & Resources (2 minutes)

This deep dive into Prysmian reveals how supposed "boring" infrastructure businesses can generate exceptional returns. The company's journey from Pirelli division to global champion demonstrates that industry structure matters more than industry growth. While flashier technology companies capture headlines, Prysmian quietly enables the infrastructure making modern life possible.

For those seeking to learn more, Prysmian's investor presentations provide exceptional detail on project economics and market dynamics. The European Cable Manufacturers Association publishes valuable industry statistics. Marco Mariglia's "The Pirelli Century" offers historical context on the company's origins. The energy transition's infrastructure requirements are detailed in the International Energy Agency's Grid Investment reports.

The hidden giants of infrastructure - companies like Prysmian - remind us that transformational businesses don't always operate in transformational industries. Sometimes, the biggest opportunities hide in the most essential, overlooked corners of the economy. As the world rewires itself for the 21st century, Prysmian stands ready to supply every meter of cable needed for the journey.