- Unions were concerned about the future of 42,500 workers in Italy
- The CEO has been replaced by TIM Brasil President as General Manager
- PD leader raises concerns about TIM’s largest investor Vivendi
MILAN (Reuters) – Italy’s Democratic Party has pledged to actively involve the coalition government in deciding the future of Telecom Italia (TIM) after the country’s largest phone company lost its fourth chief executive in six years, trade unions said. Monday.
Luigi Gubitossi resigned as CEO of the former state monopoly Friday after a clash with its largest investor, Vivendi (VIV.PA), a week after US fund KKR (KKR.N) made a $12 billion offer to take TIM (TLIT). MI) special.
PD leader Enrico Letta said at the weekend that the foreign presence in a strategic asset like TIM was raising concerns.
He cited what he described as close ties between Vivendi, controlled by French billionaire Vincent Bollore, and far-right commentator Eric Zemmour, a likely candidate in next year’s French presidential election.
Vivendi declined to comment.
Democratic Party sources said the party, a key member of Italy’s broad ruling coalition, would push the government to take a stand on the TIM network, the country’s main telecom infrastructure.
During his three-year tenure, Gubitosi won union support for a plan to create a single super-fast broadband network in Italy as the best way to protect 42,500 local jobs.
But the project ran aground under Prime Minister Mario Draghi, with Innovation Minister Vittorio Colao, a former CEO of Vodafone, favoring a competitive approach.
“Despite being viewed as a strategic infrastructure…no government has taken a brave and clear position on the network,” UILCOM said in a statement following a meeting between union representatives and Democratic Party leaders.
“We need politics to step in and put the network under state control… We are happy to be told by the leader of the PD party, Enrico Letta, that the government cannot be a spectator this time, but it cannot be a major player,” she said.
Hit by a mountain of debt and successive post-privatization acquisitions quadrupling its core earnings, TIM cannot afford the investments needed to modernize its network and meet the growing demand for telecommunications.
Sources said KKR, which has a stake in TIM’s last mile network, plans to carve out TIM’s network if its bid is successful, giving state investor CDP a key role in overseeing it.
The government welcomed the US fund’s interest, saying its position hinged on plans to secure the needed investment in the TIM network and protect employment.
Stocks in TIM closed 2% lower, countering Milan’s 0.3% rise (.FTITLMS).
TIM has appointed President of TIM Brasil (TIMS3.SA), Pietro Labriola, as Managing Director, placing oversight of the group’s strategic assets in the hands of Chairman Salvatore Rossi and setting up a special committee to study the KKR bid.
A person familiar with the matter said the committee may meet on Friday when a board meeting could take place.
Gubitosi remains a board member, and two sources close to the matter said the new leadership arrangement was too risky, adding that Labriola’s mandate only lasted until July.
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