Telecom Italia (TIM) appointed Luigi Gubitosi as chief executive on Sunday, in a move seen as portending a more aggressive shake-up at the phone group and prompting his predecessor to call for a shareholder vote on the strategy turn.
Gubitosi, a former head of telecoms group Wind and now state-appointed commissioner of struggling airline Alitalia, succeeds Amos Genish, the third TIM CEO to leave in as many years, who was unexpectedly fired last Tuesday over what sources said were disagreements with board members over strategy.
Genish, who remains a TIM board director, said he would seek investor support to call an extraordinary shareholder meeting to contest the sudden changes. Support from investors holding 5 percent of the company is needed to call such a meeting.
The telecoms veteran, who is close to TIM’s top shareholder, Vivendi, had been pursuing a three-year turnaround plan, focusing on a digital transformation and fixing TIM’s finances, backed by 98 percent of shareholders in April.
But after activist fund Elliott wrested board control from Vivendi in May, some Elliott-appointed directors wanted Genish to focus more on a spinoff of its fixed-line networks and asset sales, sources familiar with the matter have said.
Genish said on Sunday it should be up to all shareholders to decide such a drastic turn and not just a limited group of people.
“To choose between two clear strategies, breaking up the company, selling strategic assets, dismantling TIM …. and my belief to continue organic growth and improvement, the only ones who can choose between the two options are the shareholders,” he told journalists, adding he would seek to call such a meeting as soon as possible.
Gubitosi had been one of the independent directors Elliott appointed to the TIM board. He will no longer be an independent director and will give up his role on TIM’s control and risk committee after the appointment.
He takes on a company saddled with 25 billion euros ($28.52 billion) of net debt and facing growing competition at home following the entry of French low-cost telecoms group Iliad earlier this year.
Coming out of the board meeting that sealed his appointment,
Gubitosi said TIM had a great history and expertise to “win market challenges, boost cash-flow generation, cut debt and examine with care and speed the project for the creation of a single network.”
The spinoff proposed by Elliott could pave the way for the creation of a single broadband infrastructure company, combining TIM’s network with that of smaller, state-backed broadband rival, Open Fiber.
Genish had said he supported the idea of a network spinoff and a merger with Open Fiber provided TIM was in control of the merged entity.
Italy’s new government, which came into power in June, has placed the creation of a fast broadband network at the heart of its industrial policy and is drafting measures to help create one single network player for the country.
Gubitosi’s role at Alitalia is seen as putting him in the right position to negotiate with the government, sources familiar with the matter have said.
Vivendi voted against Gubitosi, a spokesman for the French investor said, adding it would be up to shareholders to decide what is the right board to roll out TIM’s future strategy. – Reuters