Telecom Italia Confirms CEO to Quit -- Update
March 21 2016 - 8:28AM
Dow Jones News
By Giovanni Legorano
MILAN-- Telecom Italia SpA is set to part company with Chief
Executive Marco Patuano after clashes over strategy with Vivendi
SA, the French media and entertainment group, which has taken a
near 25% stake in the Italian operator.
Telecom Italia confirmed on Monday that it is in advanced talks
with Mr. Patuano, 51, over the terms of his departure after reports
at the weekend that he was about to quit. He has been with the
company for 25 years and has been chief executive since November
2013.
The boardroom bust-up follows Vivendi's growing influence at
Telecom Italia. Shareholders in the former Italian telecom monopoly
approved the appointment of four Vivendi directors last December
after the French company acquired around a fifth of the Italian
group's stock.
Vivendi has continued to increase its stake to just short of the
threshold which would trigger a full takeover offer, showing its
determination to return to the telecom sector after the sale of its
domestic telecom assets in 2014 to Numéricable, a French cable
operator.
Vivendi said it had increased its stake to 24.9% early this
month around the time of a March 2 meeting between Mr. Patuano and
Vivendi's senior management in Paris. Vivendi's chairman is Vincent
Bolloré, one of France's most prominent businessmen.
Vivendi has put pressure on Mr. Patuano to be more aggressive
about cutting costs, according to people familiar with the
situation, as Telecom Italia embarks on a EUR12 billion ($13.6
billion) three-year investment program to upgrade its network and
distribute more content such as music, video and mobile games in
Italy.
Telecom Italia's new spending plan follows a string of
disappointing results.
Earnings before interest, taxes, depreciation and amortization
fell 20% in 2015 to EUR7 billion from the previous year on a 8.6%
drop in revenue to EUR19.7 billion. Net debt widened to EUR27
billion at Dec. 31 compared with EUR25.8 billion at the end of
2014, raising concerns among analysts about how the company will
pay for the investment plan.
Another bone of contention for Vivendi, the owner of music
company Universal Music and French pay-TV company Canal Plus, is
the future of its Brazil unit, according to the people familiar
with the matter. TIM Participações SA, as the Brazilian business is
known, has been at the center of takeover speculation for some
time. Mr. Patuano signaled last year that merging the mobile
operator with local rival Oi SA might be an option.
Mr. Patuano wasn't immediately reachable for comment on
Monday.
Telecom Italia's other major shareholder is Xavier Niel, another
French business tycoon and founder of Iliad SA, the French
broadband and mobile telecom operator.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
March 21, 2016 08:13 ET (12:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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