RomeThe fight for power in Telecom Italia is coming to an end. After the installation of the new CEO by the American hedge fund Elliott, whose predecessor calls for a shareholders' rebellion. The board of directors called Sunday, against the will of the French main owner Vivendi Luigi Gubitosi in the main position. This indicates that the company is undergoing a more aggressive transformation than previously planned.
The appointment of former banker Merrill Lynch is a victory for Americans who advocate a radical transformation in Telecom Italia and favor the dominant spin-off of the Italian fixed-line network. On the other hand, the French shareholder Vivendi, the largest shareholder, which is less than 24 percent, is in favor of maintaining control over the network after the sale of shares.
Now Gubitosi follows the former head of Telecom Italia, Amos Genisha, who unexpectedly had to clean up his entry on Tuesday. The background was a breakthrough in corporate strategy, as people familiar with the case said. As a result, several board members of Elliott wanted Genish to focus more on outsourcing its fixed telephony and sales activities.
In April, 98 percent of shareholders supported the Genish restructuring plan, which focuses on the digital transformation of the company and improvement of financial results. Telecom Italia is buckling under a net debt of EUR 25 billion and is struggling with increased competitive pressure, in particular by entering the French market of the low-cost Iliad supplier.
Genish still belongs to the board of directors after expelling her as CEO. He is now trying to convoke an extraordinary general meeting. Five percent of the owners need this support. Shareholders should make a fundamental decision about the upcoming change of strategy at the meeting.
In the end, it's about the division of Telecom Italia, Genish told reporters. Vivendi can support him in accordance with the information of a person familiar with the situation in his project. On the Board of Directors, the French company voted against the Gubitos, spokesman Vivendi said.