Activist fund Elliott readies for battle over Telecom Italia

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Rome (AFP)

Activist fund Elliott has fired the first shots in a battle with French giant Vivendi over Telecom Italia, writing on Friday to shareholders to ask for the removal of six board members, including the Italian operator's boss.

The request to shareholders is part of a ruthless fight over the Italian company's future ahead of its annual general meeting (AGM) next month.

Elliott, which says that it has a five percent holding in Telecom Italia (TIM), has criticised largest shareholder Vivendi's management of TIM.

Now the firm has asked for a shake-up at the top, "to improve both governance and performance at TIM".

Among the board members Elliott wants to remove is executive chairman Arnaud Roy de Puyfontaine, also chairman of the supervisory board of Vivendi, when the AGM is held on April 24.

"Elliott believes that the company is managed in the interest of Vivendi and to the detriment of all other TIM shareholders," it wrote.

"Yet, Vivendi controls only 24 percent of the ordinary shares and its stake represents only 18 percent of total equity value."

In a statement Elliott highlighted the 35 percent drop in the value of the company's share price from when who it calls "Vivendi nominees" joined the board in December 2015 to "the day before our interest in the company was made public".

Elliott cites several instances of Vivendi "exercising its control without regard for minority shareholders' divergent interests".

Among them was TIM's January 2017 awarding of an advertising contract to Havas, which is owned by Vivendi, worth a rumoured 100 million euros ($123 million).

Elliott's suggested six board replacements include Fulvio Conti, former CEO of utility multinational Enel and Extraordinary Commissioner of airline Alitalia Luigi Gubitosi, who between 2007 to 2011 was CEO of fellow Italian telecommunications company Wind.

"Elliott believes that these six candidates can empower the Board to correct the persistent undervaluation that is undeniably present at TIM."

Vivendi responded on Friday by saying it will examine Elliott's statement with an "open mind" but called the firm "a hedge fund well-known for its short termist initiatives".

"It is not sure that the plan to dismantle the Group and destabilise the teams will create value," it said in a statement.