Niel has bet 225 mln euros on Telecom Italia, may want bigger say

MILAN (Reuters) - French businessman Xavier Niel may demand a say on the strategy and board of Telecom Italia after spending 225 million euros ($246 million) on options giving him a potential stake of just over 15 percent, a regulatory filing showed.

Telecom Italia has been at the center of feverish speculation since Niel emerged in October as potentially the second biggest investor in the Italian group, behind French media group Vivendi which has a 20.1 percent stake.

In a filing with the U.S. Securities and Exchange Commission, Niel said his investment was strategic and that he could make proposals to management or other shareholders about the composition of the board and potential deals.

Niel has otherwise been tight-lipped about his involvement, saying only that he was not acting in concert with Vivendi. He declined further comment on Wednesday.

Telecom Italia’s leading executives have said they have met Niel, who according to sources also recently held talks with Italian Prime Minister Matteo Renzi, to discuss strategy.

The wording of the SEC document is the most explicit indication to date that Niel, founder of low-cost French mobile operator Iliad, may want to play an active role at Telecom Italia despite not currently owning any shares.

This means that he will be unable to attend a Dec. 15 shareholder meeting due to vote on a proposal by Vivendi -- opposed by investment funds that hold 65 percent of Telecom Italia -- to have four of its representatives appointed to the board.

Heavily-indebted Telecom Italia is widely seen as a takeover target in a consolidating industry. Its Brazilian mobile operator TIM Participacoes is also regarded as a possible prey or predator in a slowing market.


Neither Vivendi nor Niel have spelled out their vision for Telecom Italia. Adding to the uncertainty, a filing with Italian market regulator Consob this week showed JP Morgan held a potential stake of 10.1 percent in Telecom Italia. The U.S. bank has declined to give more details on its investment.

The SEC filing showed that Niel, which has built his position through call options exercisable between June 2016 and November 2017, struck the first option contract on July 14, roughly three weeks after Vivendi became the top investor in Telecom Italia.

In a sign he expects shares in Telecom Italia to rise, Niel bought options giving him the right to buy the stock at 1.24 euros and sold an equivalent amount of options that would allow his counterparty to buy the shares at 1.45 euros each. In the filing, Niel said he could either increase his holding or sell.

Shares in Telecom Italia were down 1.5 percent at 1.1460 euros at 1600 GMT on Wednesday.

The shareholder meeting next week will also vote on a plan to convert Telecom Italia savings shares into ordinary stock, a move which would dilute both Vivendi and Niel.

Italian media have speculated that Niel could borrow shares in Telecom Italia to be able to vote at the meeting but no voting rights in his name have been disclosed so far.

($1 = 0.9147 euros)

additional reporting by Stefano Rebaudo in Milan and Jean-Michel Belot in Paris; editing by Keith Weir