Vivendi says no to selling Telecom Italia stake
French media group Vivendi said Tuesday that it has no interest in selling its stake in Telecom Italia following a buyout offer from US private equity fund KKR.
The $11 billion public tender offer by New York-based Kohlberg Kravis Roberts for Telecom Italia’s entire share capital sent the stock price of the former public telephone operator soaring on Monday.
But a spokesman for Vivendi told AFP on Tuesday that “it has no intention of ceding its participation in Telecom Italia”.
Vivendi is the largest shareholder in Telecom Italia with a nearly one-quarter stake.
“Vivendi has been a long-term shareholder in Telecom Italia from the start and reiterates its desire to work with the Italian authorities and public institutions to ensure the long-term success of Telecom Italia,” the spokesman added.
A source close to the French firm said that 11 of 15 of Telecom Italia’s board members, including those from Vivendi, have requested a board meeting that will take place on Friday in order to grill the company’s executive management which they suspect solicited the bid by KKR, a company with which it has been cooperating in developing fast fibre optic internet access.
Shares in Telecom Italia fell 4.7 percent on Tuesday to 0.43 euros, having jumped by 30 percent on Monday.
Telecom Italia has said that KKR’s initial offer is for 0.505 euros a share.
Italy’s economy ministry welcomed the interest by KKR as “positive news for the country” over the weekend and said a working group would be formed to study the matter.
The ministry said it was necessary to ensure that such a project would be compatible with the rollout of ultra-wideband in the country.
Any sale would need the approval from government stakeholders, as Telecom Italia’s network is considered a national strategic asset.
Telecom Italia has said the proposal was subject to around four weeks of due diligence and would require the backing of holders of least 51 percent of both ordinary and savings shares.
Vivendi built up its stake in Telecom Italia in 2015 and took over a majority of the seats on its board.
However it lost control in 2018 when the activist US investment fund Elliott built up a stake and seized control. A long battle roiled management of the company as well its share price.
Telecom Italia’s profits plunged 98 percent in the first nine months of the year, earning only 22 million euros, due in part to a slow rollout of fibre optic networks.
The KKR bid comes as Italy’s fiber optic network is in the process of being unified with Telecom Italia set to hold a 50.1 percent stake.
KKR was a partner with Telecom Italia in its fibre optic network, FiberCop, holding 37.5 percent stake.