Telecom Italia averts Vivendi showdown at AGM
Italian phone carrier to avoid clash over chief reappointment as French conglomerate abstains
Telecom Italia’s management has averted a showdown with its top investor Vivendi as the French conglomerate said it would abstain on a vote to reappoint the group’s chief executive at a shareholder meeting on Tuesday.
Vivendi, which owns a 24 per cent stake in the Italian phone carrier, has challenged chief executive Pietro Labriola’s plan to split the group’s network from its services business and sell it to US private equity firm KKR in a bid to cut debt.
The French group, which has invested €4bn in Telecom Italia (TIM) since 2015 and has had to underwrite its investment, claims the €22bn deal undervalues the company.
Labriola is seeking a new term on Tuesday, with his reappointment being challenged by two minority investors who have presented alternative candidates. Other chief candidates put forward include former TIM executive Stefano Siragusa and Paris-based Google executive Laurence Lafont.
Vivendi was the main hurdle to Labriola’s reappointment, owing to the size of its stake, but in a statement the French group said it “does not wish to be associated with decisions concerning board appointments, as it considers it is incumbent on the ongoing management and its supporters to sort out the delicate situation in which TIM finds itself”.
Vivendi last year challenged Labriola’s plan to split the network in court on the grounds that it had not been put to a shareholder vote. Vivendi stopped short of asking the judge to put the deal on hold while the case was decided, however. The case is likely to take years to settle and Vivendi said it would continue to challenge the company’s decision.
The Italian government, which has veto power over deals involving national strategic assets such as telecommunications infrastructure, approved the deal in January. The transaction, which envisages the finance ministry taking a 20 per cent stake in the network company, is likely to be finalised over the summer.
However, Labriola came under pressure last month after it emerged during an earnings call that debt was going to come down at a slower pace than analysts had expected, sending shares down
Also last month, the Financial Times reported that short sellers — who typically borrow shares to sell them, buying them back later to profit from a decline — had amassed a record €1bn bet against TIM.
Investor Merlyn Partners, which holds a 0.53 per cent stake in TIM, has proposed a competing plan envisaging six different scenarios. Merlyn said it was “an alternative path . . . to make sure that the much-needed deleveraging happens as soon as possible”.
Four of the six scenarios envisaged the network sale to KKR, which Merlyn had sought to block last year, and one estimated TIM could be left with more than €6bn in cash and no debt by selling its profitable Brazilian unit and its Italian consumer business. The Italian government, workers unions and the outgoing management are opposed to any further fragmentation of the business beyond the network sale.
Italy’s public investor Cassa Depositi e Prestiti holds a 10 per cent stake in the group and it is yet to disclose the list of candidates it is backing.
Activist Bluebell Partners, which has previously taken on the likes of Solvay, Glencore, Danone and BlackRock, has proposed Google executive Lafont for chief. It has also lodged a complaint against TIM’s list of board candidates with Italy’s financial regulator, Consob, claiming some of the proposed directors are not independent.