French media giant Vivendi has put CEO Arnaud de Puyfontaine at the top of a list of candidates for Telecom Italia's board, suggesting that it wants de Puyfontaine to replace Giuseppe Recchi as the Italian operator's chairman.
The placement of names on the list is significant because the first one to appear is usually the nominee for the role of chairman in the case of Italian companies.
The move comes as Vivendi, which owns a 24% stake in Telecom Italia, tries to tighten its hold over the operator. Under its latest plan, the Telecom Italia (TIM) board would have just 15 members, rather than the current 16, and Vivendi would nominate ten of those members.
Vivendi needs Telecom Italia shareholders to back its proposals at a meeting scheduled for May 4.
Current Telecom Italia chairman Recchi appears on Vivendi's list of board candidates but in fourth place, behind de Puyfontaine, Vivendi CFO Hervé Philippe and Frédéric Crepin, Vivendi's general counsel.
Former Telecom Italia CEO Franco Bernabè is also nominated as a new independent board member. Mainstream press reports suggest that he could be a valuable ally for Vivendi as someone familiar with both Telecom Italia and the characteristics of the Italian phone market.
Flavio Cattaneo, the Italian operator's current CEO, was re-nominated as had been expected, having recently said he will remain with the company regardless of who becomes chairman.
Aiming to become a powerhouse in southern Europe's telecom and media markets, Vivendi faces difficulties in Italy, where regulatory authorities are scrutinizing its activities.
Besides controlling nearly a quarter of Telecom Italia, the French conglomerate also has a 28.8% stake in Mediaset S.p.A. , an Italian broadcaster founded by Silvio Berlusconi, the country's former prime minister.
Its ownership of big stakes in both companies has prompted regulatory concern about Vivendi's growing market power.
In the meantime, the shareholder battles risk becoming a distraction for Telecom Italia's senior management figures, who now face an assault on their domestic mobile business by another French company called Iliad (Euronext: ILD). (See Iliad's Italian Odyssey May Be a Hard Slog.)
Having built up a broadband and mobile business in France, Iliad secured mobile assets from merging Italian operators Wind Telecomunicazioni SpA and 3 Italia in a deal last year. Its aggressive pricing tactics at home have sparked concern in Italy about the possibility of a new price war following its market entry later this year or in early 2018.
Despite recent concern, Telecom Italia's share price is trading about 23% higher in Milan than in early July last year, when news first broke about Iliad's Italian plans.
Recent financial results have shown some signs of progress and the share price resilience appears to reflect investor confidence in Cattaneo. (See Telecom Italia Renaissance Gathers Pace.)
The operator's latest CEO, who took over from Bernabe in March last year, is working to reduce operating costs while equipping Telecom Italia with the high-speed and fully digitalized infrastructure it needs to meet new service demands.
— Iain Morris, , News Editor, Light Reading