Vivendi hit out at the running of Telecom Italia since activist fund Elliott Management took control of the operator’s board, expressing concerns about stock market performance and a failing governance team.
The French media company, which is Telecom Italia’s largest shareholder with a 24 per cent stake, had its influence reduced after Elliott Management wrested away control of the operator’s board in May following an intense battle for power.
In a statement, Vivendi said it is “deeply concerned by the disastrous management of Telecom Italia” under Elliott Management’s stewardship over the past four months.
It said the operator’s stock market performance was “dramatic”, with share price declining 35 per cent since 4 May, bringing it to the lowest level in five years.
During the tussle for control, Vivendi noted, Elliott Management promised to double Telecom Italia’s share price over the next two years.
In addition, Vivendi pointed to a “failing” governance team, with “spreading of rumours (including the departure of the CEO) causing dysfunction that is harmful to the smooth operation and results of TIM’.
TIM hits back
In response, Telecom Italia issued its own statement to Mobile World Live responding to Vivendi’s criticism. The company’s chairman Fulvio Conti said he was “deeply disappointed by the groundless and absurd accusations” made by Vivendi about the operator’s operations.
“Since its appointment, the board has been and still is focussed on the execution of the Strategic Plan, outlined by Vivendi itself during its management,” said Conti.
Telecom Italia also said the “concentration of negative elements from the other side of the Alps and influencing the share price is paradoxical for Vivendi”.
CEO under fire
Despite Telecom Italia’s response, it is undeniable that speculation around the future of CEO Amos Genish has been ripe since the management upheaval and Bloomberg reported his job could indeed be at risk. A source told the news agency company directors representing Elliott Management are growing impatient with Genish’s lack of progress in turning around the company’s fortunes.
Bloomberg’s source said Genish is resisting the fund’s plans to spin-off its phone network and sell stakes in its tower operations: he is instead focused on a strategy of organic growth.
The relationship between Genish and Elliott Management has been anything but smooth since the company took control of Telecom Italia.
In June, a media storm kicked off after Genish accused some board members of interfering with the work of management and spreading false conjectures, which he said was jeopardising the company achieving its goals and left many shareholders unhappy.
The board, however, backed Genish, after he expressed regret over making the “inappropriate comments”.
During the battle with Vivendi, Elliott Management also notably criticised Telecom’s Italia’s strategy, which cast doubt over its faith in Genish, but then backed both the CEO and its long-term plan after gaining control.Subscribe to our daily newsletter Back