Telecom Italia CEO Departs Amid Vivendi Tensions -- Update
July 24 2017 - 4:30PM
Dow Jones News
By Nick Kostov in Paris and Eric Sylvers in Milan
PARIS -- Telecom Italia SpA on Monday said Chief Executive
Flavio Cattaneo has resigned, amid mounting tensions with
shareholder Vivendi SA.
Mr. Cattaneo is the second CEO to leave the company in little
over a year as Vivendi, led by French billionaire Vincent Bolloré,
exerts control over the Italian carrier. The French media and
entertainment company built a stake of nearly 25% in Telecom Italia
-- just below the level at which an investor must make a takeover
bid. Mr. Cattaneo had held the top job since March 2016 when he
took over from Marco Patuano, who left after a disagreement with
Vivendi over strategy.
Mr. Cattaneo walks away with a payout of EUR25 million ($29.2
million), one of the highest every exit packages in Italy for such
a short-serving executive. The payout includes EUR22.9 million that
takes into account financial targets reached during the executive's
time at the helm and another EUR2.1 million in a one-year
noncompetition agreement with Telecom Italia's main competitors in
Italy and Brazil.
Telecom Italia said Mr. Cattaneo's exit, which will take effect
July 28, was related to his 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, who is leading Vivendi's efforts to expand its
content distribution across platforms, is set to take over most of
Mr. Cattaneo's responsibilities, people familiar with the matter
said. Telecom Italia Monday didn't name a new CEO, but said its
board would meet July 27 to discuss the appointment of a
successor.
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, according to people familiar with the
matter.
Vivendi didn't make a statement on Monday.
Arnaud de Puyfontaine, CEO of Vivendi and chairman of Telecom
Italia, is also expected to be handed more executive
responsibilities, 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 clashed with Italy's government over the rollout of
ultrafast broadband, although Italian Industry Minister Carlo
Calenda said this month that the differences had been resolved.
Vivendi was also upset about Mr. Cattaneo's apparent
unwillingness to work closely with its 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 fell by about 15% during the executive's
tenure. The Italian company's first-quarter revenue rose 8.5% from
a year earlier, while operating profit climbed nearly 23%.
Vivendi, whose assets include record label Universal Music Group
and French pay-TV station Canal Plus, is trying to piece together a
media empire focused on southern Europe. The company, founded as a
water utility during the reign of Napoleon III, 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.
Write to Nick Kostov at Nick.Kostov@wsj.com and Eric Sylvers at
eric.sylvers@wsj.com
(END) Dow Jones Newswires
July 24, 2017 16:15 ET (20:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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