Telecom Italia CEO Patuano Resigns After Clashing With Vivendiby
Vivendi's Bollore tightening grip on Italian phone carrier
Cattaneo said to be leading candidate to take over as CEO
Telecom Italia SpA Chief Executive Officer Marco Patuano resigned after failing to retool Italy’s former telephone monopoly fast enough to satisfy his biggest investor, Vivendi SA and its chairman, Vincent Bollore.
The resignation will become effective as soon as Telecom Italia has approved the terms, the company said in a statement on Monday. The top candidate to replace him is Flavio Cattaneo, CEO of Rome-based high-speed train operator Nuovo Trasporto Viaggiatori SpA, two people with knowledge of the situation said on Saturday. Luigi Gubitosi, who headed Wind Telecomunicazioni SpA, is also being considered, they said.
The CEO’s departure puts Bollore, a French billionaire with a record of activism, firmly in charge as he presses Telecom Italia to cut costs and focus on southern Europe. Bollore favors a sale of Tim Participacoes SA in Brazil to invest in Italy, where Telecom Italia generates about 70 percent of sales, people familiar with the matter said last year.
Bollore has been upping the pressure on Patuano for months while steadily raising Vivendi’s stake in Italy’s biggest carrier to 24.9 percent. Telecom Italia shares have been on the rise since mid-February amid Bollore’s push, and gained 3 percent to 1.04 euros at 2:10 p.m. in Milan.
With Patuano gone, Bollore may be able to accelerate the sale of the Brazilian unit and use the cash to reinvest in the Italian market, Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University, said in a phone interview.
“Marco was the one who changed the company’s brand to Tim from Telecom Italia, and it’s pretty ironic that in the new era with the French commanding the ship the word Italy has disappeared," Maffe said.
Patuano may receive a 7 million euro ($7.9 million) payout when he departs, the people said. Large shareholders expressed full confidence in the board and Chairman Giuseppe Recchi, they also said.
Vivendi, the French media company that owns Universal Music and Canal Plus, had been reviewing Patuano’s position, losing patience after investing about 3.5 billion euros, people familiar with the matter said earlier this month. In February, Telecom Italia’s 17-member board added Bollore allies to two key committees.
Patuano recently met Vivendi’s top management to discuss strategy issues such as cutting costs, revamping the domestic business and reviewing options for Brazilian unit Tim, according to the people. Vivendi had been pushing Patuano to transform the carrier into a media group with a distinct focus on southern Europe.
Vivendi CEO Arnaud De Puyfontaine has met with potential candidates to replace Patuano, according to one of the people.
Telecom Italia reported a 2015 loss after a negative impact of bond transactions during the first part of the year. The net loss was 72 million euros, compared with net income of 1.35 billion euros in 2014, the Milan-based company said Thursday.
Patuano, born in Alessandria, near Turin, joined Telecom Italia in 1990 after a degree in Finance at Bocconi University. He presided over an almost 60 percent increase in Telecom Italia shares. He sold the carrier’s stake in Telecom Argentina SA for $960 million and planned to sell a stake in tower unit Inwit.
"Patuano got a company that had suffered from a vacuum of strategy and a lot of regulatory issues back on the right track," Maffe said.