3 Min Read
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), Intesa (ISP.MI), Generali (GASI.MI) and Mediobanca (MDBI.MI).
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), 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.
Analysts say a new leader increases the likelihood that Telecom Italia will put its Brazilian unit TIM Participacoes (TIMP3.SA) up for sale to help cut debt and fund badly-needed domestic investments.
Bernabe had opposed asset sales and had been seeking support for a share issue to raise as much as 5 billion euros ($6.8 billion) to avoid a credit rating downgrade to 'junk' status.
During his tenure Telecom Italia's debt was cut by 8 billion euros but almost 30 billion euros was wiped off its share market value, a 75 percent drop in the price.
Telecom Italia shares were up 1.7 percent at 0.64 euros by the 1630 GMT market close on Wednesday, down by 7 percent so far this year and over 17 percent on a year ago.
Reporting by Stefano Rebaudo and Danilo Masoni; Editing by Sophie Walker and Greg Mahlich