Vivendi (EW) now holds c.15% of Telecom Italia’s (TI; rated EW) ordinary shares, raising the key question of how it might influence TI’s strategy and what for. We have looked at TI’s bylaws and the shareholding structure of all the related parties (Group Bolloré, etc) and see a number of ways for Vivendi to get board representation without being hostile. Regarding the “what for” we see little possibility for a rapid change in TI’s strategy: a sale of its Brazil business is unlikely in the short term; TI does not need Vivendi for content, in our view; and in Italy, we believe TI is already following the right strategy. Given the possibility of building a controlling stake at no premium, Vivendi may have just been opportunistic. In European telecoms, we continue to see more attractive opportunities elsewhere, notably BT (OW), DT (OW) or TEF DE (OW).