Vivendi CEO Signals Impatience With Telecom Italia Management

By Nick Kostov And Manuela Mesco 

French media company Vivendi SA signaled its impatience with top management at Telecom Italia SpA on Sunday, as its push to gain seats on the Italian telecom's board risks foundering.

In an interview, Vivendi Chief Executive Arnaud de Puyfontaine suggested that the French group is growing frustrated with the management and other investors in Telecom Italia, Italy's former state monopoly.

Vivendi--controlled by French industrialist Vincent Bolloré--has spent more than EUR3 billion (about $3.3 billion) to acquire a 20% stake in Telecom Italia, but isn't represented on the board. Vivendi is Telecom Italia's largest shareholder.

"As a shareholder what we want is alignment," said Mr. de Puyfontaine. "We want to see alignment between CEO, chairman, shareholders and management team and the board. This has not always been the case."

The remarks come before a shareholders meeting scheduled for Tuesday that is likely to see a host of divisions among Vivendi, the company's management and other large shareholders. Those divisions could further paralyze Telecom Italia, which has struggled with poor leadership and a lack of strategic direction for years.

Vivendi has been battling to gain board representation because it seeks to give Telecom Italia--which is heavily indebted and under pressure from rivals in its domestic market--what it considers being a better direction.

It has proposed that shareholders Tuesday consider a resolution to increase the company's board to 17 members from 13 and to name four directors representing Vivendi. Mr. de Puyfontaine is one candidate being put forward, alongside Stéphane Roussel, Hervé Philippe and Félicité Herzog.

However, a number of Telecom Italia's other shareholders have opposed the plan, and it risks being defeated at the meeting.

As opposition mounted last week to its push to join the board, the French company announced it would abstain from voting on another proposal by Telecom Italia's management to convert Telecom Italia's savings shares into ordinary stock. Shareholders are slated to vote on that proposal as well Tuesday.

Under the plan, all shareholders would be diluted about 30% and Telecom Italia would receive EUR500 million ($549.8 million) in cash. Analysts have touted a conversion of the nonvoting shares as a way for Telecom Italia to simplify its corporate structure. If Vivendi abstains, that plan--which requires a two-thirds majority to pass--could also fail.

Mr. de Puyfontaine said Vivendi was "not against the share conversion in principle" but wanted to review the conditions of the proposal. He said the cash payment of 9.5 European cents by saving shareholders to convert their shares may be too low and asked for a fairness opinion on behalf of ordinary stock holders.

Vivendi's share would fall to about 13% in the conversion went through.

Telecom Italia has said the terms of the conversion were determined with the help of outside advisors and are comparable to other such transactions.

If both proposals fail at Tuesday's meeting, Vivendi would be willing to speak with Telecom Italia further on ways to resolve the impasse on the question of board representation and the share conversion plan, said Mr. de Puyfontaine.

"If there were no agreement we'd be very happy to see what the board would do to resolve this. We remain very open," Mr. de Puyfontaine said. He added that the French group would be "pragmatic" in accepting fewer seats if its stake was diluted as part of a share conversion, although it is insisting on the four seats currently.

Telecom Italia didn't return a request for comment Sunday.

Telecom Italia has seen a large turnover in shareholder structure in recent years, with its weakness making it a particularly appetizing target of late. Earlier this fall, another French tycoon, Xavier Niel, bought options that, if exercised, could give him as much as 15% in the company, making him the second-largest shareholder behind Vivendi.

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

(END) Dow Jones Newswires

December 13, 2015 18:16 ET (23:16 GMT)

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