Chiefs at Telecom Italia hit back at proposals for the future of the operator submitted by investor Elliott Management, describing an asset divestment strategy proposed by the latter as unsustainable in the long term.
In an update to the operator’s strategic plan covering 2018 to 2020 – originally unveiled in December 2017 and the subject of severe criticism from Elliott Management – Telecom Italia’s bosses said its vision of the company would provide stability, create value and allow the operator to “better face future operational and financial challenges.”
Elliott Management’s counter proposal would see Telecom Italia sell a stake in its newly spun-off fixed-line business and divest a range of other assets in a bid to cut debt and increase shareholder returns.
The criticism of Telecom Italia’s business plan is part of a wider effort by Elliott Management to replace the Vivendi-controlled board at the operator with independent directors, which led to an intense tussle for control.
In its updated plan, Telecom Italia said counter-proposals offered a “significant reduction in the current scope of the company”, specifically criticising proposals to sell-off sections of the company and merge its Brazil unit with another operator in the country.
Telecom Italia added the investor’s suggestions had been carefully analysed and, with the exception of one proposal to investigate options for the future of international wholesale unit Sparkle, had not been included in its strategic plan because they were deemed “premature and not feasible”.
“One of the primary objectives of the strategic plan is to strengthen the operational and financial profile of TIM, preparatory to the return of TIM to an investment grade rating; achieving this objective could be compromised by potential divestment of assets and by the premature distribution of dividends to shareholders,” the operator explained.