Italy exercises ‘golden power’ to rein in Vivendi at Telecom Italia
The Italian government approved on Monday the exercise of its “golden power” over Telecom Italia (TIM) <TLIT.MI>, following concerns over French media group Vivendi’s <VIV.PA> growing influence at the company.
Without giving any details Prime Minister Paolo Gentiloni said that he had signed a decree activating the so-called “golden power” after Vivendi, now TIM’s biggest investor with a 24 percent stake, tightened its grip on the company.
The golden power – which has never been used by Rome before – enables the government to veto certain actions, including asset sales, mergers and any change of control of companies which are regarded as being of strategic national importance.
TIM’s shares were down 1.4 percent at 0.76 euros by 1535 GMT, when shares in Vivendi were down 0.3 percent at 21.20 euros. Both companies declined to comment.
Rome took notice of Vivendi’s growing influence at TIM after the French group, led by acquisitive billionaire Vincent Bollore, appointed a majority of board members at the Italian company and also installed two of its own top executives as chairman and chief executive earlier this year.
Last month Italy’s market watchdog Consob said Vivendi was effectively controlling TIM, a charge which has been denied by the French company.
Industry sources said the government’s special powers may be applied to all the assets within the company which Rome considers strategic such as international service provider Sparkle and software unit Telsy.
Sparkle is seen as politically sensitive because its submarine network connects countries in Europe, the Mediterranean and the Americas, while Telsy provides encrypted communications technology to customers such as the Italian army and the government.
However, according to industry sources the golden power could also be extended to TIM’s fixed-line network, one of the company’s most prized assets.
There has been widespread media speculation that Rome could push for the various assets to be spun-off or sold, or it could ask for representatives from the government or communications regulator AGCOM to flank executives at the various companies on certain matters.
The government may also decide to fine TIM for failing to promptly notify the authorities when Vivendi gained effective control.
Italian politicians have been calling on and off since 2006 for TIM’s landline network to be transferred to a state-controlled entity as Rome considers it a strategic asset that should be a neutral platform open to all phone companies.
Heavily-indebted TIM has also been criticised for putting off completely replacing its ageing copper network with optic fibre.
Vivendi is also under regulatory scrutiny in Italy for its accumulation of a near 30 percent stake in private broadcaster Mediaset <MS.MI>, owned by former prime minister Silvio Berlusconi, because of concerns that Bollore will come to dominate the country’s media and telecoms industries.
(Writing by Agnieszka Flak; Editing by Greg Mahlich)