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Telecom Italia Main Investor Proposes Recchi as Chairman

Eni SpA Chairman Giuseppe Recchi
Eni SpA Chairman Giuseppe Recchi. Photographer: Simon Dawson/Bloomberg

March 19 (Bloomberg) -- Telecom Italia SpA’s biggest investor nominated Giuseppe Recchi as chairman, picking an entrepreneur and former General Electric Co. executive to help steer its turnaround effort.

Telco SpA, the Telefonica SA-led investor group that owns 22.4 percent of Telecom Italia, also proposed that Marco Patuano continue as chief executive officer, it said in a statement today after a board meeting to discuss candidates. Recchi, 50, is chairman of Italy’s largest energy company Eni SpA. Bloomberg News reported the proposals yesterday.

Marco Fossati, a minority investor whose Findim Group SA has a 5 percent stake in Telecom Italia, is challenging Telco’s list with a slate led by Vito Alfonso Gamberale as chairman.

“Patuano is committed to continuing upgrading networks and changing Telecom Italia,” said Andrea Giuricin, a professor who specializes in media and telecommunications at Milan Bicocca University. “Like all European former phone monopolies, it needs to become a real media company, with the support of broadcasters, starting from Mediaset and News Corp.’s Sky Italia unit.”

Shareholders will vote on a new chairman at an annual meeting on April 16 in Milan. Telecom Italia separated the role of chairman and CEO after Franco Bernabe’s departure last year, naming Patuano as CEO. It then appointed Aldo Minucci as interim chairman. Patuano staying would mean a continuation of Telecom Italia’s strategy to upgrade networks in Italy and Brazil while trying to reduce its debt load.

Share Performance

The shares fell 1.1 percent to 83 euro cents in Milan. They have advanced 15 percent this year, after ending eight straight annual declines in 2013.

Recchi worked at General Electric for more than a decade in finance, mergers and acquisitions, and strategy. He was head of GE South Europe until 2011. He is also a board member of Exor SpA, the Agnelli family holding company that controls Fiat SpA.

He started his career as an entrepreneur in 1989 at Recchi SpA, a builder of public infrastructure.

Telco also considered proposing Borsa Italiana SpA Chairman Massimo Tononi to head Telecom Italia’s board, people familiar with the matter have said.

Among new directors, Telco proposed Terna SpA CEO Flavio Cattaneo, Denise Kingsmill, Giorgina Gallo, Laura Cioli, Giorgio Valerio, Luca Marzotto, Elena Vasco, Paolo Fumagalli and Maurizio Dattilo. Current directors Tarak Ben Ammar and Jean Paul Fitoussi will get another term, according to Telco’s proposal.

Investor Action

Fossati has been pushing for greater investor participation in corporate governance decisions at the carrier after failing to overthrow the board. He also proposed that Franco Lombardi and Girolamo Di Genova join the board candidates.

“Gamberale is a well-known name since he created Telecom Italia’s mobile unit Tim in 1995,” Giuricin said. “To be appointed he needs the support of international funds which may prefer to him Recchi.”

Last week, Telecom Italia gave in to Fossati’s demand to add a vote on the next chairman to the agenda of the annual meeting scheduled for April 16. The board will elect the chairman if no candidate receives a majority of votes.

Allowing a chairman vote at the general meeting would further curtail the influence of Telefonica. Spain’s biggest phone company withdrew its two representatives from the Italian carrier’s board last year to avoid perceived conflicts of interest because the companies compete in Brazil. Telco said today Telefonica supports its list of candidates and didn’t put forward any other officials.

Other investors of Telco are Assicurazioni Generali SpA, Intesa Sanpaolo SpA and Mediobanca SpA. The financial investors may exercise their right to exit the seven-year shareholder pact in June under an agreement last year with Telefonica.

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Mark Beech, Robert Valpuesta

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