Rome
Telecom Italia SpA Chief Executive Officer Flavio Cattaneo is negotiating a possible exit from the company after tensions increased in recent weeks with top shareholder Vivendi SA, according to people familiar with the matter.
Concerned that he can no longer manage Italy’s largest phone carrier the way he wants, Cattaneo doesn’t want to risk tarnishing his image and reputation by staying, said the people, who asked not to be identified discussing private talks. Vivendi, meanwhile, is unhappy with recent politically charged comments by Cattaneo that didn’t meet the company’s standards, the people said. Cattaneo may leave Telecom Italia after reporting first-half results on July 27, two of the people said.
A spokesman for Milan-based Telecom Italia denied there were tensions between Cattaneo and Vivendi and said there aren’t any discussions with the French media conglomerate about the CEO’s departure. A spokesman for Vivendi also denied any strain in the relationship with Cattaneo.
Vivendi aims to name its chief convergence officer, Amos Genish, as one of the executives to run Telecom Italia, though he won’t be CEO, one of the people said. Naming Genish, a Brazilian, as general manager, with all the powers necessary to lead the company, would be less politically problematic than appointing him as CEO, since he’s not Italian.
Genish has a successful track record as a telecom executive, most recently as CEO of Telefonica SA’s Brazilian unit. Before that, he was co-founder and CEO of GVT Holding SA, a Brazilian telecommunications company that was controlled by Vivendi for a time.
Cattaneo’s contract calls for him to get about 40 million euros ($45.6 million) in shares and cash if he leaves the company, according to a “special award” clause he arranged with the company when he was hired as CEO.
No final decisions have been made, and Cattaneo and Vivendi could resolve their differences and decide he should stay as Telecom Italia’s chief, the people said.
In the last few weeks, Cattaneo and Telecom Italia clashed with the Italian government over telecommunications coverage in rural areas. The government engaged Open Fiber, a joint venture between Italy’s state lender CDP and Enel SpA, to build a new national fibre network.
Telecom Italia is competing in the ultra-broadband segment in rural areas through a project called Cassiopea, a plan that could damage the government’s effort to boost local investments, Claudio De Vincenti, minister for territorial cohesion and southern Italy, said in an interview last month with Corriere della Sera.
In a hearing June 28, Cattaneo told lawmakers that public tenders for fibre networks in rural areas have been designed to ensure victories for Open Fiber. Italy’s minister for Economic Development Carlo Calenda called Cattaneo’s comments were unacceptable.
Vivendi, which owns about 24 per cent of Telecom Italia, recently won European Union approval to control the phone carrier and installed its CEO, Arnaud de Puyfontaine, as executive chairman of the former Italian monopoly in early June. The Paris-based company, led by billionaire Vincent Bollore, is pushing to create the dominant media group in southern Europe, with assets including pay-TV provider Canal Plus and record label Universal Music Group.
Telecom Italia shares have declined about 16 per cent since Cattaneo took the helm in March 2016, despite moves by the former chief of power network operator Terna SpA to trim costs and invest in more lucrative broadband services.
