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Telecom Italia investors vote on board battle as hopes of truce glimmer

Stock MarketsMar 29, 2019 07:25
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© Reuters. FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan

ROZZANO, Italy (Reuters) - Telecom Italia's (TIM) warring investors will put their jostle for board seats at the Italian phone group to another shareholder vote on Friday but the focus is already shifting to a potential truce.

French media group Vivendi (PA:VIV) and U.S. fund Elliott have been trading blows for over a year over how to revive Telecom Italia (MI:TLIT) (TIM), a slumbering telecoms heavyweight saddled with more than 25 billion euros (£21.5 billion) of debt.

Elliott wrested control of TIM's board last May after accusing Vivendi of looking after its own interests and calling for a more radical shake-up of the telecoms group.

An escalating war of words has cost TIM shares dear, wiping out a third of their face value in the last year. It also led to the replacement of CEO Amos Genish, a Vivendi ally, with Luigi Gubitosi, formerly a board director from the Elliott camp.

Graphic: TIM's share performance since January 2018 https://tmsnrt.rs/2WsvGzN

On Friday, Vivendi seeks to replace Chairman Fulvio Conti and four other Elliott-backed directors, citing "substantial lack of independence" and accusing them of conspiring to fire Genish.

It is expected to lose the vote, with three influential proxy advisers urging shareholders to vote against the proposal, citing Vivendi's own poor governance track record.

But beyond the vote, shareholders are interested in signs the two rivals are finally ready to bury the hatchet and allow management to push through measures to slash debt, tackle competition and pursue strategic options to boost value.

"TIM can ill afford any further delays in fixing its operational issues," said Emanuele Vizzini, general manager at Milan-based investment fund Investitori Sgr.

For an interactive version https://tmsnrt.rs/2HLyoNE

TIM has underperformed its European peers for years, it is facing new rivals in both broadband and mobile, and its Brazil business is only gradually recovering from economic malaise.

In his first three-year strategy plan unveiled last month, new CEO Gubitosi pledged to accelerate cost cutting, cut debt and grow core profits from next year.

State lender Cassa Depositi e Prestiti (CDP), which recently raised its stake to become TIM's second biggest investor, could act as a power broker between the two rivals, whose battle has unnerved investors and government alike.

Sources familiar with the matter said the different sides were open to finding some sort of accord after the AGM.

A truce between Vivendi and Elliott could speed up the creation of a single broadband operator in Italy through the merger of TIM's copper and fibre network with smaller rival Open Fiber, a project backed by the CDP but which has been one of the main bones of contention between the two rivals.

"I hope to see some signs of a ceasefire at the AGM that would allow management to finally operate," Vizzini added.

Telecom Italia investors vote on board battle as hopes of truce glimmer
 

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