Vivendi launches legal battle against Telecom Italia

Yet another skirmish for Vivendi and its Italian quagmire. For several months now, the largest shareholder of the transalpine operator Telecom Italia has been in open war against the board of directors of the local flagship. The latter decided to sell its fixed network to the American investment fund KKR without going through a shareholder vote at a general meeting. An approach deemed “illegal” by Vivendi, which decided this Friday to put its threats into action by filing a complaint in Milan to have the operation canceled.

A 23.75% shareholder in Telecom Italia (TIM), Vivendi has continued to criticize since the spring this proposed sale of Telecom Italia's fixed network for an amount which could reach 22 billion euros at most. . The operation is historic in the European telecoms industry. Never has an operator separated itself from its fixed network, in other words the “crown jewels” for an operator. But the situation at Telecom Italia is alarming. The group faces a colossal debt of more than 26 billion euros and suffered a loss of 2.92 billion euros last year, and gloomy growth prospects. On site, the arrival of Iliad (owned by Xavier Niel) in 2016 shook up the local operator market, causing prices and profitability of established players to fall.

Also read: Telecom Italia wants to merge with KKR, to the great displeasure of Vivendi

With the sale of its fixed network to KKR, the board of directors of Telecom Italia wants to breathe new life and focus on the development of optical fiber in the country. But Vivendi doesn't see it that way. Vincent Bolloré's group judges that this sale would in no way resolve the Italian group's operational difficulties and its strategic and managerial wanderings. Not stubborn in keeping the asset, Vivendi is however demanding a price of 31 billion euros for the fixed network, much more than the 19 billion promised by KKR. A price which could rise to 22 billion in the event of a merger of Telecom Italia with Open Fiber which owns a competing fiber optic network and the purchase of Sparkle, an entity specializing in submarine cables.

In 2022, a first approach by KKR failed due to the refusal of Vivendi. The American fund returned to the charge at the start of 2023. The French group, for its part, has increased attempts since the summer to derail this deal. Having let go of all its positions on the TIM board of directors in January, the group nevertheless wrote several times to the board of directors, but also to the Italian stock market regulator, or tried to convince the other shareholders to block the operation during the extraordinary general meeting, the latter having not been consulted by TIM.

In a press release published at the beginning of November, after the last green light given by the board of directors of TIM to the operation, Vivendi judged that the shareholders of Telecom Italia had been “violated”. According to the French group, the decision was taken “without having previously informed and requested the vote of the shareholders of Telecom Italia, thus violating the applicable governance rules”.

Protesting against an “illegal” decision involving “the responsibility of the TIM directors who voted in favor of the operation”, Vivendi then threatened to file a complaint, basing its analysis on “five legal opinions” according to which such a transfer had to go through the vote at an Extraordinary General Meeting of Shareholders

More information to follow...