July 25, 2017 / 3:05 PM / 3 months ago

Telecom Italia management shake-up fuels Vivendi's ambitions

MILAN/PARIS (Reuters) - France’s Vivendi has tightened its grip on Telecom Italia by removing its CEO Flavio Cattaneo and paving the way for a joint venture between its own pay-TV Canal+ and the Italian group, in a boost to the French firm’s ambitions to become a southern European media powerhouse.

FILE PHOTO: Amos Genish attends a news conference for Vivendi's 2010 annual results in Paris, France March 1, 2011. REUTERS/Jacky Naegelen/File Photo

Telecom Italia (TIM) said late on Monday after a board meeting that Cattaneo would be stepping aside as chief executive on July 28 after 16 months in the job, with a severance payment of 25 million euros ($29 million).

Vivendi supported Cattaneo’s departure, sources familiar with the matter said, after failing to convince the Italian executive to share power with other managers and work on a new strategic plan.

Vivendi, TIM’s top investor with a 24 percent stake, had also clashed with Cattaneo in recent weeks over a running battle with the Italian government over a broadband plan, sources have said.

Just as the board signed off on Cattaneo’s departure, one of the sources told Reuters Vivendi’s pay TV unit Canal+ had proposed the creation of a joint venture with TIM on audiovisual rights in order to produce films and TV series.

“Replacing Cattaneo comes at a time when Vivendi feels it needs to adjust its strategic direction and start investing again in Italy,” said one of the sources, all of whom asked not to be named because the talks are private.

Pooling resources to acquire and commission TV series and films would allow Canal+ and TIM to drive a harder bargain in the content war with bigger rivals like Netflix and Amazon. It would also step up the convergence between TV content and distribution that is at the heart of Vivendi’s strategy.

Vivendi, led by billionaire Vincent Bollore, has taken a more hands-on approach to Telecom Italia since winning a majority of board seats earlier this year and appointing its own CEO Arnaud de Puyfontaine as chairman.

Another source close to the matter said on Monday that Amos Genish, Chief Convergence Officer at Vivendi, would be named as managing director at TIM with the task of running the former telecom monopolist on a day-to-day basis.

Genish, co-founder of Brazil’s Global Village Telecom, has a successful record as a telecoms manager with a strong focus on network investments and creating synergies between content and infrastructure.

Morgan Stanley analysts said Telecom Italia offered a new manager a good opportunity to use convergence to differentiate itself in a crowded Italian market before the arrival of Iliad, the French low-cost mobile operator.

Iliad is looking to grab a quarter of the Italian mobile market using the same low prices and straightforward contracts that conquered France.

A second source said Vivendi was particularly concerned about Iliad’s arrival in Italy, expected as early as this year, adding that Vivendi had wanted to flank Cattaneo with a team of managers to head off the challenge, but he refused.

Cattaneo had won plaudits from Vivendi and other investors for cost cuts at the heavily indebted firm.

But a heated exchange last month with Italian government officials over its ultrafast broadband rollout plans ruffled feathers at the French giant.

Vivendi’s influence is already under scrutiny in Rome after it built a stake in Mediaset last year to become the Italian broadcaster’s second-largest shareholder after former prime minister Silvio Berlusconi.

“Genish is the perfect candidate to give TI a new impetus,” the first source said.

“The only problem is Bollore wants to keep a low profile with the Italian regulator and appointing Genish could reinforce the feeling that Vivendi has too much influence over TIM.”

An Italian regulator has ordered Vivendi to cut its stake in either TIM or Mediaset, ruling it is in breach of rules designed to prevent a concentration of power.

According to two sources, TIM’s current deputy chairman Giuseppe Recchi, a former chairman at state-controlled oil major Eni, will stay on to focus on relations with the government.

TIM said it will discuss the matter of a successor to Cattaneo at a board meeting on Thursday which had already been called to sign off on the company’s second-quarter results.

($1 = 0.8565 euros)

additional reporting by Agnieszka Flak in Milan and Sophie Sassard in London; editing by Grant McCool and Giles Elgood

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