October 3, 2013 / 1:51 PM / 5 years ago

Telecom Italia chairman to resign at board meeting

MILAN (Reuters) - Telecom Italia’s (TLIT.MI) executive chairman Franco Bernabe will hand in his resignation at the start of the company’s board meeting on Thursday, a source with knowledge of the situation said.

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

The departure of 65-year-old Bernabe, who has been at the helm of the struggling company for six years, follows a strategy clash with core investors Telefonica (TEF.MC), Intesa (ISP.MI), Generali (GASI.MI) and Mediobanca (MDBI.MI).

After the announcement last month that Spain’s Telefonica had struck a deal to gradually take ownership of Telco, the holding company controlling Telecom Italia via a 22.4 percent stake, Bernabe’s departure seemed increasingly likely.

His replacement faces 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.

A second source with direct knowledge of the situation has said chief operating officer Marco Patuano is likely to replace Bernabe as chief executive, while Poste Italiane head Massimo Sarmi could become chairman.

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

A new chief executive 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 been seeking support for a capital increase of as much of 5 billion euros to avoid a credit downgrade to junk.

By 1337 GMT Telecom Italia shares were down 1 percent.

($1 = 0.7358 euros)

Reporting by Stefano Rebaudo, writing by Danilo Masoni; Editing by Sophie Walker

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