Telecom Italia CEO Said to Be Leaving Amid Vivendi Tensions
July 24 2017 - 11:11AM
Dow Jones News
By Nick Kostov in Paris and Eric Sylvers in Milan
PARIS-- Telecom Italia SpA is set to announce the departure of
Chief Executive Flavio Cattaneo on Monday, after mounting tensions
with shareholder Vivendi SA, according to people familiar with the
matter.
Mr. Cattaneo would be the second CEO to depart in little over a
year as Vivendi, controlled by French billionaire Vincent Bolloré,
tries to influence strategy. The French media and entertainment
company built a stake of nearly 25% in the Italian operator--just
below the level at which an investor must make a takeover bid. Mr.
Cattaneo has held the top job since March 2016 when he took over
from Marco Patuano, who left after a disagreement with Vivendi over
strategy.
Telecom Italia said Mr. Cattaneo's imminent exit was related to
him meeting the company's financial targets ahead of time and the
need for a manager with different skills. But people familiar with
the matter said it follows disagreements between Vivendi management
and the Italian executive. Mr. Cattaneo didn't respond to an email
seeking comment.
Amos Genish, Vivendi's chief convergence officer, is set to take
over most of Mr. Cattaneo's responsibilities, people familiar with
the matter said. They said that Vivendi wants Telecom Italia to
quickly transform its model to address stiff competition from the
likes of Italian utility Enel SpA and France's Iliad SA.
Arnaud de Puyfontaine, CEO of Vivendi and chairman of Telecom
Italia, is also expected to be handed more executive
responsibilities on Monday, as is Giuseppe Recchi, deputy chairman
of the Italian company, according to the people.
People familiar with Vivendi's position said it began to lose
confidence in what it considered to be Mr. Cattaneo's brash style
after he rowed with Italy's government over the rollout of
ultrafast broadband, although Italian Industry Minister Carlo
Calenda said this month that the standoff had been resolved.
Vivendi was also upset about Mr. Cattaneo's apparent
unwillingness to work closely with its own managers, the people
said. It tried to limit Mr. Cattaneo's powers by appointing a
managing director to assume some of his powers but that option was
shot down by the Italian executive who wanted more autonomy to
complete a turnaround of the company.
"The situation was becoming crippling," said one of the
people.
Still, Vivendi in recent months has praised Mr. Cattaneo's
tenure, with recent earnings reports suggesting that Telecom
Italia's turnaround efforts are bearing fruit, even though the
Italian company's stock is down by about 15% since the executive
took over. The Italian company's first-quarter revenue rose 8.5%
from a year earlier, while operating profit climbed nearly 23%.
Vivendi is trying to piece together a media empire focused on
southern Europe and owns assets including record label Universal
Music Group and French pay-TV station Canal Plus. The company
splashed out more than EUR3 billion for its stake in Telecom
Italia.
Vivendi continues to be embroiled in legal disputes with Silvio
Berlusconi's Mediaset SpA in Italy after pulling out of a deal last
year to buy pay-TV unit Mediaset Premium.
Telecom Italia's remuneration and nomination committee is
meeting Monday and will give a recommendation to the board on the
size of Mr. Cattaneo's exit package.
The executive is likely to walk away with a payout of about
EUR25 million ($29.2 billion), according to a person familiar with
the discussions. The amount will be dictated by the executive's
contract that outlines bonuses linked to reaching specific
financial targets, the person said.
Write to Nick Kostov at Nick.Kostov@wsj.com and Eric Sylvers at
eric.sylvers@wsj.com
(END) Dow Jones Newswires
July 24, 2017 10:56 ET (14:56 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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