Telecom Italia CEO Meets With Top Shareholder -- 2nd Update

By Manuela Mesco and Nick Kostov 

Telecom Italia SpA Chief Executive Marco Patuano traveled to Paris on Wednesday to meet with top management at Vivendi SA, as the Italian telecommunications operator's top shareholder applies more pressure on the executive to deliver a turnaround, a person familiar with the matter said Thursday.

Vivendi, a French media company, has plowed some EUR3.5 billion, or about $3.8 billion, into Telecom Italia and is pushing Mr. Patuano to cut costs faster and address such strategic challenges as whether the company should pursue a sale of its Brazil unit, people familiar with the matter said.

Vivendi will start agitating for Mr. Patuano's departure if results don't improve and the management of Telecom Italia fails to align with the wishes of the French company, these people said.

"As you can imagine, Vivendi isn't here to support a steady-as-she-goes strategy," one of the people said.

The Italian firm is under pressure to deliver results after years of no revenue growth and strategic zigzagging. Vivendi, which held 23.8% of Telecom Italia on Feb. 29, has been exerting more influence over the Italian firm's strategy since it gained four seats in Telecom Italia's board in December.

Telecom Italia has struggled to outline a fruitful strategy to deal with the twin challenges of a protracted economic downturn in Italy and fierce competition that has sent prices spiraling downward in the domestic market, which accounts for most of the group's business.

Last month, the former Italian monopoly unveiled a strategic plan involving a EUR12 billion investment in Italy during the three-year period ending in 2018--more than its target of EUR10 billion for its 2015-17 strategic plan.

The Italian operator's 2015 preliminary earnings before interest, taxes, depreciation and amortization fell 20% compared with the previous year, to EUR7 billion, while revenue declined 8.6% to EUR19.7 billion, the company said in February.

In a speech to the Italian Senate in January, Vivendi CEO Arnaud de Puyfontaine said the French company needed more time to get a thorough idea of the situation before deciding on a definitive strategy for the Italian firm.

Write to Manuela Mesco at [e-mail] and Nick Kostov at [e-mail]

(END) Dow Jones Newswires

March 03, 2016 15:27 ET (20:27 GMT)

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