Only weeks after being named to the role by Elliott, which secured control of the Telecom Italia board over its largest shareholder Vivendi SA last month, he’s trying to get a grip on the carrier’s contentious relationship with the Italian government during the more than two years of oversight by the French media company.
Elliott’s victory was a blow for Vivendi’s billionaire backer Vincent Bollore, who was often at loggerheads with the previous Italian government and regulators over the French media company’s influence on the carrier. That administration determined in September that Telecom Italia failed to report Vivendi’s increased shareholding, violating the so-called Golden Power rule for businesses with assets deemed of national importance. Italy fined the carrier €74.3mn ($86.9mn).
One of the first moves by Conti, 70, was to start a review of how the company managed the disclosure issues and whether a fine could have been avoided, according to people familiar with the matter, who asked not to be identified because the discussions are private. Conti was CEO of Italy’s biggest utility, Enel SpA, from 2005 and 2014 and previously had senior roles at companies including Telecom Italia and Mobil Oil.
A spokesman for Telecom Italia denied that Conti has ordered up a review. He maintained that notifying the Italian government was unnecessary and the company is preparing for a hearing over its appeal of the fine, the Rome-based spokesman wrote in an emailed statement.
In a statement following the fine on September 28, Telecom Italia said it wasn’t obligated to notify authorities because there was no change of control at the company and of its fixed-line network.
The government penalty was among setbacks in Italy for Bollore and his plan to build a southern European media empire. Vivendi, which agreed to a deal to acquire its initial stake in Telecom Italia in 2014, came under increasing scrutiny from Italian leaders after becoming the largest shareholder in 2016 over concerns that the French media company wasn’t disclosing its true intentions. Having a foreign company control the carrier rankled regulators and politicians because Telecom Italia’s grid is considered of strategic importance to the country.
Bollore also courted controversy in Italy after Vivendi amassed a large stake in Silvio Berlusconi’s Mediaset SpA. Vivendi is still in a legal dispute with Mediaset over a pay-TV deal gone bad with the French company’s Canal+.
The fine at Telecom Italia hurt the carrier’s first-quarter results. While sales rose, the operator posted a worse-than-expected earnings decline, with profit reduced by one-time charges of 95mn euros, mainly linked to the government penalty.
In not disclosing Vivendi’s increased holding and influence by the August 7 deadline, Telecom Italia followed the advice of the company’s lawyers and external advisers, who argued that it didn’t need to inform the government.
De Puyfontaine, also Vivendi’s CEO, was chairman and interim chief executive officer of Telecom Italia at the time. He’s still on Telecom Italia’s board as a representative of the media company.