Telecom Italia board awaits its fate at shareholder meeting

The current management of Telecom Italia is expected to learn its fate on Friday at a shareholder meeting called by minority shareholder Marco Fossati to vote on his proposal to remove the current board and appoint a new one.

CEO Marco Patuano told the Wall Street Journal that the vote could finally clarify the Italian operator's strategy and allow it to proceed with its investment plans in its domestic market. In a statement, the company said investors with a combined 53.8 percent stake in Telecom Italia have registered for the meeting on Friday.

Fossati, the chairman of Findim group, has been pushing for a shakeup of the board following the move by Telefónica in September to increase its control over Telecom Italia via Telco, the holding company with a 22.4 per cent share in the Italian operator. The Spanish operator's move has raised concerns over the independence of Telecom Italia's board, largely in relation to the fact that the two companies have competing assets in Brazil.

Brazilian antitrust watchdog Cade has already called on Telefónica to reduce its influence in the country by undoing its 2010 buyout of its partner in Vivo or the move to take over Telco, or persuade Telecom Italia to sell TIM Participações SA, also known as TIM Brasil.

Fossati is opposed to the sale of TIM Brasil, and said the asset is essential for the future of Telecom Italia.

Meanwhile, Telefónica CEO Officer Cesar Alierta and Julio Linares, a former COO, have stepped down from Telecom Italia's board to avoid perceived conflicts of interest in Brazil. Telefónica also said it is considering legal action over the remedies suggested by Cade.

Additionally, the vote on Friday has been further complicated by news that BlackRock has acquired a 9.97 per cent stake in Telecom Italia. The money manager was forced to confirm its stake this week after an earlier filing to the U.S. Securities and Exchange Commission said the stake was 10.14 per cent. Italian regulator Consob claimed the company had not complied with Italian disclosure requirements by failing to report an increase in its stake. BlackRock has since issued an amended SEC filing.

For more:
- see this WSJ article (sub. req.)
- see this Telecom Italia release
- see this Bloomberg article
- see this Telefónica release
- see the amended BlackRock SEC filing
- see this Bloomberg video

Related Articles:
Telefónica between a rock and a hard place on Brazil
Telefónica, Telecom Italia grapple with Latin America challenges
Telecom Italia sells Argentina unit for $960M
Telecom Italia unveils new strategy, plans €3.4B investment
Report: Telecom Italia mulls €9B sale of Brazilian unit

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