MILAN: Telecom Italia (TIM) CEO Luigi Gubitosi survived a boardroom showdown on Thursday at a meeting sought by top investor Vivendi following two profit warnings in three months at Italy’s former phone monopoly.
Vivendi has called into question Gubitosi’s role and sources close to the matter had said sparks could fly on Thursday.
TIM said its board had discussed the difficult market situation and the challenges facing the group, agreeing steps to prepare a new strategic plan due in February.
Discussions were tense, two people with knowledge of the matter said, adding Vivendi would continue to pressure the CEO to address the debt laden group’s issues.
Vivendi was not immediately available to comment.
Having failed to stem a steady revenue decline in TIM’s crowded domestic market, Gubitosi has outlined to the board plans to squeeze cash out of the group’s assets, including its prized fixed-line grid that supplies services to millions of Italian households and businesses.
His proposals, aimed at bringing in new investors into TIM’s assets under a spin off plan, failed to get Vivendi’s backing at a meeting last month, people close to the matter have said.
The French media group wants to have a bigger say over the fate of TIM’s network assets, deciding in agreement with the Italian government, according to the people.
TIM also said in Thursday’s statement no negotiations were ongoing over its network or other strategic assets.
Vivendi holds 24% of TIM, an investment exposing it to a potential 1.8 billion euro capital loss at current market prices.
TIM’s network assets are deemed strategic by the government, and Treasury-owned CDP has built a 9.8% stake in the group to oversee them and help counter Vivendi’s influence.
Both the French group and CDP in March backed Gubitosi’s reappointment and CDP is for now resisting Vivendi’s efforts to question his position, sources have told Reuters.
Innovation Minister Vittorio Colao, a former Vodafone boss tasked by Prime Minister Mario Draghi with implementing plans to boost Italy’s ultra-fast connections, is expected to play a key role in deciding the future of TIM and its CEO.
Colao has poured cold water on a project championed by the Treasury under Italy’s previous government to merge TIM’s fixed-line access network with that of state-backed rival Open Fiber.
Sources have said Gubitosi has been trying to revive the plan by convincing Vivendi that TIM should cede control of the merged entity, an option the French group has so far opposed.