Vivendi's Billionaire Chairman Tightens Grip Over Telecom Italia

  • French appointees joined `crucial' committees at phone company
  • Bollore said to favor divesting carrier's Brazilian unit

Vivendi SA Chairman Vincent Bollore is tightening his grip over Telecom Italia SpA.

The French billionaire, who secured four seats on Telecom Italia’s board in December, is now filling key posts with his people as he pushes an agenda that’s said to include the sale of the Italian carrier’s Brazilian unit, a stake worth about $2.5 billion at current market prices.

Vivendi already used its 20 percent voting share to block a stock conversion plan backed by Telecom Italia’s chief executive officer, Marco Patuano. Now, with his appointees in committees overseeing areas such as control and risk, Bollore is in a better position to influence strategy. Vivendi favors a sale of Tim Participacoes SA in Brazil to focus more on Italy, where Telecom Italia generates about 70 percent of sales, people familiar with the matter said last year.

“Bollore is playing really smart,” said Andrea Giuricin, a professor at the University of Milano-Bicocca who specializes in media and telecommunications. “Being present in the company’s most crucial committees isn’t just procedural stuff, but will allow Vivendi to better advance his wishes, for example by pushing the company to sell its Brazil unit.”

On Monday, Telecom Italia’s board approved the enlargement of its control and risk committee by one member to six, appointing Vivendi nominee Felicite Herzog, a former manager at energy company Areva SA, the Italian company said in a statement. Also, Telecom Italia’s nomination and remuneration committee named Vivendi CEO Arnaud de Puyfontaine and Chief Operating Officer Stephane Roussel as members after the resignation of another French director, Jean-Paul Fitoussi.

"Vivendi naming executives to Telecom Italia internal committees doesn’t change decision-making process and shows their commitment to our company,” Chairman Giuseppe Recchi told reporters in London, where the company held investor and press meetings Tuesday.

A spokesman for Vivendi declined to comment on the committees or the company’s plans for Telecom Italia.

The former Italian phone monopoly last year became the center of fight for influence between Bollore, worth $4.6 billion according to the Bloomberg Billionaires index, and French entrepreneur Xavier Niel -- worth $8.1 billion -- who bought a stake equivalent to 15.1 percent through his personal investment company. Niel, the founder of broadband provider Iliad SA, holds financial instruments that don’t yet carry voting rights.

Shares of Telecom Italia rose 0.7 percent to 82.6 euro cents at 11:25 a.m. in Milan, giving the company a market value of about 15 billion euros ($16.7 billion).

Biggest Carrier

Telecom Italia is the biggest mobile and broadband carrier in the country of about 60 million people and also controls Tim, Brazil’s second-biggest wireless provider. Patuano is trying to revive business at home with more lucrative broadband services while getting rid of wireless towers to reduce a net debt load of 27.3 billion euros. With four network providers, Italy’s wireless market is among Europe’s most competitive.

Telecom Italia will invest about 12 billion euros in domestic broadband services as Patuano struggles to revive one of Europe’s most indebted phone carriers. In the three years through 2018, Telecom Italia will spend about 3.6 billion euros on fiber in Italy, the company said in a statement Tuesday. That’s an increase of about 2 billion euros from the previous plan and will extend the reach of fiber to 84 percent of the population from 75 percent. Telecom Italia also confirmed its previous 14 billion reais ($3.5 billion) investment plan for Brazil.

The company Tuesday reported 2015 revenue and earnings that missed analysts’ estimates as its Brazilian unit grappled with economic turmoil and a drop in the real.

Sales fell 8.6 percent to 19.7 billion euros, the company said in a statement Tuesday. Analysts predicted 19.9 billion euros, the average of estimates compiled by Bloomberg. Telecom Italia will take a 1.1 billion euro charge linked to staff costs and other provisions.

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