Telecom Italia chief offers resignation after KKR buyout offer

Telecom Italia is close to revamping its sixth administration in less than nine years since Luigi Gubitosi stepped down as senior manager ahead of a surprise meeting expected Friday afternoon.

Pietro Labriola, head of Telecom Italia in Brazil, has been asked to replace Gubitosi according to three people who took part in the talks. However, board members and other people close to the talks in Paris and Rome are hoping for some final results as the internal talks this week have been “very hot”.

The Italian Ministry of Finance, which oversees the 10 percent stake in the company through state-owned Investor Cassa Depositi e Prestiti, will also have a response to any regulatory oversight, according to the public.

Telecom Italia did not respond to a request for comment. Vivendi, the group’s main ally, as well as Italian officials declined to comment. Economic Development Minister Giancarlo Giorgetti, however, said this week “the Italian government does not [influence the board’s] management options “.

Vivendi, a French company with a 24 percent stake in Telecom Italia, had previously indicated that Gubitosi was the cause of the company’s poor performance and had begun to complain about changes in management. Several other board members requested a meeting Friday to discuss the future of the board chief, according to people familiar with the board’s deliberations.

However, interest changed last Sunday following the KKR Construction of € 33bn taking Telecom Italia secretly.

US acquisitions were set at € 0.505 – 45 per cent of the company’s closing price last Friday which would give the company € 10.7bn. It has about € 22.5bn in total debt.

If possible, the alliance will be the largest buyer of European companies in history.

But Vivendi found that the price offered by KKR, about half of the average paid to build its share in 2016 according to experts, is very low.

According to a number of people who participated in the negotiations, the French conglomerate also believes that the US buyout fund was set up with the support of Gubitosi behind them.

KKR previously worked with Gubitosi after earning 37.5 percent in FiberCop, the Telecom Italia ” last mile ‘network, for € 1.8bn last year.

Vivendi and KKR declined to comment on the allegations as they were vehemently denied by Telecom Italia.

Telecom Italia has brought some challenges this year: it has issued two profit warnings in three months. an integrated system of complexities and its partner Open Fiber appear to have been disrupted and Serie A’s free broadcasting alliance with Britain’s DAZN platform did not materialize as planned.

Telecom Italia sales fell by almost 40 percent since Gubitosi took power in November 2018 and in the middle of this month.

According to a number of people close to the commissioner, Gubitosi decided to wait for an uncontested vote by volunteering to step down. In a letter to members of the commission on Thursday evening, Gubitosi stated that he would like to take the lead in negotiating with the KKR, the precautionary measures and the decision of the counselor to step aside, according to three people familiar with the contents of the letter. .

Whether the purchase agreement can be improved in the meantime depends on the Italian government, which has the right to restrict foreign exchange.

Prime Minister Mario Draghi told reporters this week that what the government wants is to protect Italian jobs, technology and the network. He has set up a working group made up of agents to consider Telecom Italia options.

Separately, in a statement to reporters on Thursday night, Draghi’s spokesman denied that the Prime Minister had highlighted what would happen to the KKR.

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