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Telecom Italia: plot thickens ahead of crucial vote

Italian investment group Cassa Depositi e Prestiti (CDP) is preparing to take a stake in Telecom Italia (TIM) of up to 5%, according to local reports. The move is likely to further complicate Vivendi’s attempts to retain its existing influence over the strategic direction of the telecom operator in the face of an attempt by US hedge fund Elliott to dislodge it.

CDP, which is majority controlled by the Italian finance ministry and which also has a 50% stake in the Open Fiber project to wire Italy’s cities, led by utility Enel, has moved to acquire the stake in time to take part in the TIM annual general meeting on April 24, according to reports. CDP is seen as likely to align with Elliott in forcing through change.

News of CDP’s intervention came after Elliott succeeded in securing a vote at the April 24 meeting on the replacement of Vivendi’s board representatives and the appointment of six new independent directors after TIM’s board of statutory auditors added the item to the agenda for the meeting.

Vivendi had earlier moved to head off a decisive vote on April 24 when its TIM board members resigned en masse in late March. The resignation of TIM chairman Arnaud de Puyfontaine and six other directors associated with Vivendi was accompanied by a vote to delay the re-election of the board to May 4, buying some extra time for Vivendi to persuade investors to support its strategy.

TIM issued a statement to clarify that the May 4 meeting would nevertheless go ahead as planned. It said that the board of statutory auditors’ recommendation would be reviewed by the company’s existing board of directors on April 9 – the deadline for submissions of slates of candidates for a new board – and that the initiative of the board of auditors would not have any impact on the ordinary shareholders’ meeting scheduled for May 4.

“This meeting was properly called following the resignation of the majority of the directors, to renew the whole board and this will take place through slate voting as prescribed in article 9 of the Company Bylaws,” TIM said.