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Telecom Italia's CEO, Chairman Quit

Ray Le Maistre
11/29/2007

Telecom Italia (TIM) laid any boardroom doubts to rest today as it announced the resignation of its chairman Pasquale Pistorio, deputy chairman Carlo Buora, and CEO/managing director Riccardo Ruggiero. (See Telecom Italia Execs Resign.)

The changes will be effective from December 3, when the carrier will hold a farewell board meeting for the trio. Their replacements are expected to be named at that same meeting, with Franco Bernabè and Gabriele Galateri di Genola set to be named CEO/managing director and chairman respectively. (See New Italian Cheeses.)

The upheaval had been expected and is the direct result of the carrier's change of ownership. (See TI Revamp Expected.)

Telecom Italia is now effectively controlled by a consortium led by Telefónica SA (NYSE: TEF) following the sale of holding company Olimpia -- the principal shareholder in the Italian incumbent -- by previous owner Pirelli SpA (Milan: PECI.MI). (See Telefónica Gets Green Light for TI Stake and Consortium Buys TI Stake.)

Analysts at Dresdner Kleinwort , while "unimpressed by the speed of decision making by TI's new owners," believe the appointments of Bernabè and Galateri di Genola are "positive" and will help "draw a line under TI's recent painful history."

Bernabè has held the managing director position at Telecom Italia before (1998-1999), while Galateri di Genola is an experienced businessman who has held board positions at major Italian companies such as Fiat, Mediabanca (one of Telefónica's partners in the new controlling shareholder group), and Pirelli.

In a research note issued this week the Dresdner analysts said they expect details about the Italian operator's strategy and further management changes to emerge once the new top level appointments are ratified by the board next Monday.

"Whilst there are no easy fixes for the operational, competitive and strategic issues affecting TI, the Group's new shareholders and top team will now address them," added the Dresdner team.

Key to Telecom Italia's domestic strategy will be its decision regarding the structural separation of its fixed access network. The carrier has been moving towards that model, but that decision may now be under review. (See Italians to Separate and Telcos Consider the Splits.)

The Italian incumbent's ownership has been one of the key European telecom sagas of 2007, as AT&T Inc. (NYSE: T), along with partner América Móvil S.A. de C.V. , initiated takeover talks earlier this year, but abandoned their bid in April. (See AT&T Abandons Italian Bid.)

Telecom Italia's share price was down €0.03, about 1.4 percent, to €2.16 on the Milan exchange Thursday morning. The operator recently reported revenues for the first nine months of 2007 of €23.2 billion ($34.2 billion), up 0.4 percent from a year earlier. (See Telecom Italia Reports Q3.)

— Ray Le Maistre, International News Editor, Light Reading

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