Telecom Italia SpA (TIT) directors will keep their positions after shareholders rejected a proposal by an activist investor to dismiss the board amid a clash over the indebted phone company’s strategy.
About 50.3 percent of shareholders present yesterday at a meeting in Rozzano, near Milan, voted against the plan put forward by Marco Fossati’s Findim Group SA, notary Carlo Marchetti announced at the assembly. Some 42.3 percent backed the motion and 7.4 percent abstained.
The vote marks a victory for top shareholder Telefonica SA (TEF), which in September tightened its grip by boosting its indirect stake in Telecom Italia. Findim, with a 5 percent holding, has said Telefonica and its partners in the Telco SpA investment vehicle have too much influence over the carrier.
“The time has come to move beyond controversy and go back to focus on the future of our group and work toward shareholders’ interest,” Telecom Italia Chief Executive Officer Marco Patuano said before the results were released.
The vote ends one episode in a battle over control of a company that’s seeking to reduce debt and revive its business. Telefonica, Spain’s biggest phone company, has sought closer ties with Telecom Italia to take advantage of its holdings in Brazil, a growing market where both carriers operate.
Fossati cited conflicts of interest between Telefonica and Telecom Italia as a reason for his bid to dismiss the board and said the company needs an “alternative project” that would protect minority investors.
At the meeting, Patuano confirmed Telecom Italia’s plan to sell assets including wireless towers to reduce debt and reiterated that its Brazilian business is strategic.
Still, Telecom Italia has come under scrutiny by regulators over a sale of some mandatory convertible bonds to investors including BlackRock Inc. (BLK:US) last month. And prosecutors in Rome said yesterday they are reviewing recent “developments” at Telecom Italia as part of an examination with Italian stock market regulator.
Telecom Italia and Telco aren’t being investigated for obstruction of regulatory activities or any other crimes, according to a statement read on the phone by an assistant to Rome prosecutor Nello Rossi.
The official issued the statement after Corriere della Sera and other newspapers reported that authorities are probing Telco investors, including Telefonica, for allegedly obstructing the activity of regulators.
Shares of Telecom Italia rose 0.4 percent to 70.4 cents in Milan yesterday. The stock has declined for eight consecutive years and is up 3 percent in 2013.
Earlier this month, Telefonica CEO Cesar Alierta and a former executive Julio Linares stepped down from Telecom Italia’s board to avoid the perceived conflicts of interest in Brazil. The country’s antitrust authorities fined Madrid-based Telefonica and ordered it to reduce its Brazilian holdings or convince Telecom Italia to sell its local unit. That decision followed the September agreement by Telefonica to gradually increase its stake in Telco. Other Telco investors are Assicurazioni Generali SpA, Intesa Sanpaolo SpA and Mediobanca SpA.
Telecom Italia shareholders today rejected the appointment of Stefania Bariatti and Angelo Tantazzi as directors proposed by Telco.
CEO Patuano took over from Franco Bernabe, who resigned in October after clashing with Telefonica. A month later, Patuano unveiled plans to dispose assets including wireless towers and a broadcasting unit and to issue a convertible bond. The company also agreed to sell its Argentine business.
Telecom Italia’s debt is rated junk by Moody’s Investors Service and Standard & Poor’s, and its sales and earnings are slumping amid stiff competition and falling prices in its home market.
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