Telecom Italia's chief quits after strategy clash

Thu Oct 3, 2013 2:56pm EDT
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MILAN (Reuters) - Telecom Italia's TLIT.MI executive chairman Franco Bernabe resigned on Thursday after losing the support of core shareholders, clearing the way for possible asset sales at the debt-laden former monopoly phone company.

In a statement Telecom Italia thanked Bernabe for his contribution to the group but gave no reasons for his departure after six years at the helm.

The resignation of the urbane 65-year-old businessman follows what industry and market sources have said was a clash over strategy with the core shareholders Telefonica (TEF.MC: Quote), Intesa (ISP.MI: Quote), Generali (GASI.MI: Quote) and Mediobanca (MDBI.MI: Quote).

These shareholders agreed two weeks ago to gradually give Spain's Telefonica full ownership of Telco, their investment vehicle which controls Telecom Italia via a 22.4 percent stake. Bernabe had opposed the deal, a number of the sources have said.

His replacement will face the task of cutting nearly 29 billion euros ($39 billion) of debt at Telecom Italia, one of Italy's largest private-sector employers, as well as reversing years of sluggish growth and boosting its share price.

Bernabe, an internationally-respected figure who is fluent in English and German, had led oil and gas giant Eni (ENI.MI: Quote), Italy's biggest company, between 1992 and 1998 before moving on to Telecom Italia.

He is likely to be replaced by the chief operating officer, Marco Patuano, as chief executive, while Poste Italiane head Massimo Sarmi could be named chairman, said a source familiar with the situation.

The appointments are unlikely to be made at Thursday's board meeting and will take a couple of weeks to be decided, the source said.

"The group has strong potential. I believe its current management is able to develop it," said board member Gaetano Micciche as he left the board meeting.   Continued...

Franco Bernabe, Telecom Italia chairman and CEO, poses in his office in Rome, April 19, 2013. REUTERS/Alessandro Bianchi