* Telco board, Mediobanca committee to meet on nominees
* Bernabe may retain CEO role or become chairman-reports
* Bernabe hailed for prudent cost cuts, avoiding fireworks
(Adds Telco board meeting scheduled for Monday)
By Deepa Babington
ROME, March 9 Speculation over whether Franco
Bernabe will retain his job as chief executive of Telecom
Italia, Italy's biggest phone company, is growing ahead of
meetings by controlling shareholders to draw up a new board.
Some analysts expect Bernabe, who has championed diligent
cost-cutting and debt reduction over more headline-grabbing
measures to turn around Telecom Italia, to stay on as CEO, but
Italian media have reported he could be named executive
chairman instead as major investors disagree on appointments.
"I view either (position for Bernabe) as a positive for
investors as he is likely to continue to defend Telecom Italia
from shareholder-unfriendly moves by the government,
regulators, unions," said Bernstein analyst Robin Bienenstock.
The process kicks off on Thursday when the nominations
committee at Mediobanca meets to draw up its nominees for the
board and the CEO role, a source close the matter said. The
board of Telco, which controls Telecom Italia with a 22.45
percent stake, will then meet on Monday, March 14, to finalise
the list, the source said.
The Telco investor pact is made up of Italian investors
Generali (GASI.MI), Intesa Sanpaolo (ISP.MI) and Mediobanca
(MDBI.MI) and Spanish phone giant Telefonica (TEF.MC).
Bernabe has often been attacked for bypassing radical
initiatives to boost growth, but his fortunes have improved in
recent weeks after the company's 2010 profit beat forecasts
and it promised to boost dividend payouts 15 percent annually.
Telecom Italia shares are up 18 percent this year,
outperforming the FTSE Italia all-share index, which rose 7.6
percent in the same period. They hit a 52-week high of 1.16
euros last week. Strong growth at its Brazilian and Argentine
units have also spurred investor confidence in the company.
Bernabe has also won the support of Asati, which represents
smaller investors in Telecom Italia and has warned that new
management could create "strong repercussions" for the
A new CEO could also result in a new strategy or changes in
the company's fibre-optic investment plans, Bienenstock said.
Bernabe has won applause from analysts for fending off pressure
from the Italian government and rival operators to invest more
aggressively in a fibre-optic network.
Indeed, Bernabe has been on the defensive for much of his
time since taking the helm in December 2007, resisting pressure
to spin off the company's fixed-line unit and taking flak from
unions for his plans to cut jobs.
He has also attracted criticism for not doing more to spur
growth at home.
Bernabe has steadfastly maintained, however, that a former
monopoly like Telecom Italia, weighed down by 31.5 billion
euros of debt and falling revenues on its home turf, needs to
work on improving efficiency first.
"It's true that in Italy, competition is strong and the
pressure on prices is enormous," he told L'Espresso magazine.
"But until the economy recovers, it is difficult to extract
benefits from the home market. The only strategy possible is
that of reducing costs, like we've been doing so far."
(Additional reporting by Stefano Rebaudo in Milan; Editing by
Will Waterman and Steve Orlofsky)