Vivendi gets conditional EU approval to gain control of Telecom Italia

BRUSSELS/MILAN (Reuters) - French media group Vivendi won EU antitrust approval on Tuesday for its plan to gain control of Telecom Italia after pledging to sell the Italian company’s majority stake in broadcasting services group Persidera.

FILE PHOTO: The Vivendi logo is pictured at the main entrance of the entertainment-to-telecoms conglomerate headquarters in Paris, March 10, 2016. REUTERS/Charles Platiau/File Photo

Vivendi is Telecom Italia’s biggest shareholder, with a 24 percent stake, and tightened its grip on the former phone monopoly this month by appointing two thirds of its board.

Last year it also took a 29 percent stake in Italian broadcaster Mediaset, controlled by the family of former prime minister Silvio Berlusconi, raising concerns about the French group’s growing influence over Italian firms.

The offer to sell the Persidera stake came after the European Commission voiced concerns that Vivendi might charge TV channels more for wholesale access to digital terrestrial television networks given both Persidera’s and Mediaset’s significant share in the sector.

“In order to address the competition concerns identified by the Commission, Vivendi committed to divest Telecom Italia’s stake in Persidera,” the EU competition enforcer said.

Analysts said a sale of Persidera, which had a book value of 138 million euros in Telecom Italia’s latest annual report, was far from certain given its owners have been unable to secure a good offer for the asset in the past.

Telecom Italia owns 70 percent of Persidera, with the remainder in the hands of publisher GEDI.

Telecom Italia could not immediately be reached for comment, Vivendi had no immediate comment and GEDI declined to comment.

Telecom Italia and Vivendi shares were little changed after the ruling, with traders saying the market had already priced in the fact that Vivendi had de facto control of Telecom Italia.

Vivendi had been expected to put forward its own CEO Arnaud de Puyfontaine as Telecom Italia chairman when the board came up for renewal this month, sources said, but in the end incumbent Giuseppe Recchi was confirmed in the post pending the EU ruling.

Analysts said investors were more concerned about the impact of a separate regulatory review in Italy on Vivendi’s plan to build a media empire in southern Europe.

Italian communications regulator last month ordered Vivendi to cut its stake in either Telecom Italia or Mediaset, saying the French group’s stakebuilding at both companies was in breach of rules designed to prevent a concentration of power in the country’s telecoms and media sector.

The EU said its green light had no relevance to the AGCOM review and ruling.

The French group, which is considering an appeal, has until about mid-June to present the regulator with a proposal.

Some analysts expect Vivendi to cut its weight in Mediaset, with which it has been embroiled in a dispute over a failed pay-TV deal, and focus on Telecom Italia instead.

“The real value upside for Vivendi is in getting the Telecom Italia turnaround story right ... it’s far easier for them to execute on that than try to deal with Mediaset in a contentious situation,” said Paul Marsch, an analyst at Berenberg.

Mediaset declined to comment.

Additional reporting by Mathieu Rosemain in Paris and Giulia Segreti in Milan; Editing by Susan Fenton and David Evans