BlackRock ups stake in Telecom Italia ahead of vote for control

Mon Dec 16, 2013 4:40pm EST
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By Danilo Masoni and Stefano Rebaudo

MILAN (Reuters) - BlackRock raised its stake in Telecom Italia to make it the struggling firm's second-biggest investor ahead of a vote for control, but did not say if it would side with top shareholder Telefonica or rebels fighting the Spanish firm's strategy.

The world's biggest money manager said on Monday it had a voting stake of 7.8 percent in Italy's biggest telecoms group, which is trying to end years of sluggish growth and cut 28 billion euros ($38 billion) in debt.

Telefonica believes the key to survival is selling Telecom Italia's Brazilian business - valued at over $11 billion - to lighten debts that remain heavy despite the sale of assets in Argentina and the issue of convertible bonds.

Such a sale would also benefit Telefonica by allowing it to retain sway over its own Brazilian mobile phone unit Vivo. It has been told by Brazil's competition watchdog that without the sale it must seek a new partner for Vivo.

But businessman Marco Fossati, an investor with a 5 percent stake in Telecom Italia, says selling TIM Participacoes, known as TIM Brasil, would damage Telecom Italia's business.

He and small shareholder group ASATI have forced a shareholder meeting on Friday to vote to dismiss the company board and appoint a new one. Fossati's Findim Group submitted on Monday its slate of five candidates to take over as directors.

One source with knowledge of discussions between the shareholders said BlackRock had seemed initially to be against plans to remove the board but in the last few days there had been talk they could support it.

"On the surface the BlackRock move could be anything or nothing at all. They have so many funds," the person said, referring to the complexity of the giant financial firm's holdings.   Continued...

A broken Telecom Italia public telephone is pictured in downtown Milan, December 16, 2013. REUTERS/Stefano Rellandini