It's not been a good few days for CEOs of European incumbent operators. On Thursday last week, Stéphane Richard resigned as CEO and chairman of Orange Group in France. Then late on Friday, Telecom Italia (TIM) lost its fourth CEO in six years after Luigi Gubitosi resigned as CEO and general manager of the Italian operator.
The two chief executives are leaving for somewhat different reasons: Richard's position became untenable after he was found guilty of complicity in the "misuse of public funds" in the fraud case relating to the late French businessman Bernard Tapie. Richard has said he intends to appeal.
Gubitosi, meanwhile, has been engulfed in an increasingly acrimonious boardroom dispute over the future strategy of TIM, particularly in relation to the contentious plan to create a single fiber network in Italy. French media giant Vivendi, which holds a 24% stake in TIM, had questioned the role of Gubitosi following two profit warnings in three months. Indeed, Vivendi has reportedly been unhappy with TIM's recent performance and that of Gubitosi.
KKR wades in
To cap it all, US-based investors KKR then launched a possible public tender offer for TIM's entire share capital, "aimed at the delisting of the company."
Reuters reported that Gubitosi had offered to relinquish his responsibilities, saying in a letter he did not want to stand in the way of the board giving prompt consideration to KKR's approach. The former CEO apparently criticized directors for stalling on KKR's offer to please some shareholders. Indeed, Vivendi reportedly believes that KKR's offer does not adequately value TIM.
It was also previously reported that private equity firms CVC and Advent have studied possible plans for TIM, with CVC also rumored to be considering a joint bid with KKR.
TIM has now said it had set up a special committee headed by its chairman, Salvatore Rossi, to study the offer with the help of advisers it plans to appoint.
In the meantime, Pietro Labriola, the CEO of TIM Brazil has been appointed general manager of TIM Group in order to ensure continuity. Rossi, a former central bank official, has taken on Gubitosi's remaining powers and Paola Sapienza has been appointed lead independent director.
According to Reuters, because Gubitosi remains a director on the board, Labriola has been prevented from joining the board and being named as CEO. It has been suggested that he will take on the role of CEO in future. TIM said its nominations committee will work with headhunters Spencer Stuart to ensure a stable leadership for the group over the medium term, taking into account the evolution of TIM's structure and assets.
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— Anne Morris, contributing editor, special to Light Reading