Cattaneo Quits as Telecom Italia CEO, Gets €25M
Flavio Cattaneo is to receive an overall settlement fee of €25 million ($29 million) from Telecom Italia after agreeing to the termination of his contract as CEO.
The payment is lower than the €30 million ($35 million) that Cattaneo was reported to be seeking and will comprise a basic fee of €22.9 million ($26.7 million) plus an additional €2.1 million ($2.5 million) subject to "claw-back" if he breaches certain covenants. (See Eurobites: Cattaneo Hopes for €30M Kiss-Off.)
Those covenants prevent Cattaneo from engaging in various ways with Telecom Italia's main competitors in Italy and Brazil for the next year.
Cattaneo is believed to have quit under pressure from French media conglomerate Vivendi, which is Telecom Italia's biggest shareholder with a stake of nearly 24%. (See Telecom Italia CEO to Quit Next Week – Report.)
Vivendi is reported to have been unhappy with Cattaneo after he appeared to upset the Italian government by insisting that Telecom Italia (TIM) would build broadband networks in rural areas in competition with a state-backed scheme. (See Telecom Italia in Broadband Clash With Govt – Reports.)
In a sign of its growing determination to exert control over the Italian operator, Vivendi has also been looking to make chief convergence officer Amos Genish the managing director of Telecom Italia, according to reports.
Such a move would naturally be seen as a challenge to Cattaneo's authority and suggest that Vivendi has lost faith in his ability to lead the company.
Cattaneo was reportedly angered by the decision to put Genish in a leadership role at Telecom Italia, and dismayed that he was not to run Telecom Italia in the way he saw fit.
In a statement, Telecom Italia said Cattaneo had been responsible for an "extraordinary turnaround" that has seen it "increase its customers and revenues to levels not reached in the last ten years, increase its core investments, bringing the company back to leadership of the mobile segment and [cover] around 70% of the country with fiber."
After taking charge of Telecom Italia in March last year, Cattaneo embarked on a major efficiency drive while continuing to channel funds into the rollout of higher-speed fixed and mobile networks. (See Telecom Italia Names Cattaneo as New CEO.)
He appears to have had far more success than his predecessors at knocking Telecom Italia into shape, and recent earnings reports from the operator have contained encouraging signs. (See Telecom Italia Renaissance Gathers Pace.)
Telecom Italia's share price closed up about 4% in Milan today and is nearly 22% higher than on July 26 last year.
In its statement, the operator said it would continue to pursue Cattaneo's fiber rollout plan following his departure from the company on July 28.
This is not the first time Vivendi is seen to have clashed with a Telecom Italia CEO and the latest developments will raise questions about the French company's influence over the former state-owned telecom monopoly.
Marco Patuano, who led the operator immediately before Cattaneo, was similarly reported to have fallen out with Vincent Bolloré, Vivendi's chairman, over the strategy he was pursuing.
Yet while Patuano had failed to bring about any notable improvement in Telecom Italia's performance, Cattaneo appears to have had a very positive impact on the business in the last year.
— Iain Morris, , News Editor, Light Reading