March 29, 2019 / 7:00 AM / 22 days ago

Telecom Italia investors vote on board battle as hopes of truce glimmer

    * Shareholder meeting kicks off at 1000 GMT
    * Vivendi expected to lose bid for board replacements

    ROZZANO, Italy, March 29 (Reuters) - Telecom Italia's (TIM)
 warring investors will put their jostle for board
seats at the Italian phone group to another shareholder vote on
Friday but the focus is already shifting to a potential truce.
    French media group Vivendi and U.S. fund Elliott
have been trading blows for over a year over how to revive
Telecom Italia (TIM), a slumbering telecoms heavyweight saddled
with more than 25 billion euros ($28.12 billion) of debt.
    Elliott wrested control of TIM's board last May after
accusing Vivendi of looking after its own interests and calling
for a more radical shake-up of the telecoms group.
    An escalating war of words has cost TIM shares dear, wiping
out a third of their face value in the last year. It also led to
the replacement of CEO Amos Genish, a Vivendi ally, with Luigi
Gubitosi, formerly a board director from the Elliott camp.    
 
 
 TIM's share performance since January 2018 tmsnrt.rs/2WsvGzN
    
    On Friday, Vivendi seeks to replace Chairman Fulvio Conti
and four other Elliott-backed directors, citing "substantial
lack of independence" and accusing them of conspiring to fire
Genish.
    It is expected to lose the vote, with three influential
proxy advisers urging shareholders to vote against the proposal,
citing Vivendi's own poor governance track record. 
    But beyond the vote, shareholders are interested in signs
the two rivals are finally ready to bury the hatchet and allow
management to push through measures to slash debt, tackle
competition and pursue strategic options to boost value.
    "TIM can ill afford any further delays in fixing its
operational issues," said Emanuele Vizzini, general manager at
Milan-based investment fund Investitori Sgr.    
 
 
 For an interactive version tmsnrt.rs/2HLyoNE
    TIM has underperformed its European peers for years, it is
facing new rivals in both broadband and mobile, and its Brazil
business is only gradually recovering from economic malaise.
    In his first three-year strategy plan unveiled last month,
new CEO Gubitosi pledged to accelerate cost cutting, cut debt
and grow core profits from next year.
    State lender Cassa Depositi e Prestiti (CDP), which recently
raised its stake to become TIM's second biggest investor, could
act as a power broker between the two rivals, whose battle has
unnerved investors and government alike.
    Sources familiar with the matter said the different sides
were open to finding some sort of accord after the
AGM. 
    A truce between Vivendi and Elliott could speed up the
creation of a single broadband operator in Italy through the
merger of TIM's copper and fiber network with smaller rival Open
Fiber, a project backed by the CDP but which has been one of the
main bones of contention between the two rivals.
    "I hope to see some signs of a ceasefire at the AGM that
would allow management to finally operate," Vizzini added. 

    
 (Reporting by Agnieszka Flak and Elvira Pollina
Editing by Alexandra Hudson)
  
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