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Exclusive - Telecom Italia CEO set to step down by July 27: sources
July 21, 2017 / 2:12 PM / 2 months ago

Exclusive - Telecom Italia CEO set to step down by July 27: sources

FILE PHOTO: Telecom Italia Chief Executive Officer Flavio Cattaneo gestures as he arrives to attend a meeting in Rome, Italy, November 18, 2016. REUTERS/Remo Casilli/File Photo - RTX3AGA9

MILAN (Reuters) - Telecom Italia (TIM) (TLIT.MI) Chief Executive Flavio Cattaneo is set to step down in the next few days after clashing with top shareholder Vivendi (VIV.PA), six sources familiar with the matter told Reuters on Friday.

Four of the sources said Cattaneo’s departure would likely be announced by July 27, when the company’s board meets to discuss first-half results.

A top Vivendi executive, Amos Genish, is set to be appointed as TIM’s managing director, effectively taking over from Cattaneo, the sources said, speaking on condition of anonymity as the decision isn’t public.

TIM and Vivendi declined to comment, while Cattaneo did not reply to an emailed request for comment.

Relations between the 54-year-old Cattaneo, who took over as TIM’s boss in March 2016, and the French media group which owns 24 percent of the phone company have soured in recent weeks, several sources have said.

According to them, Vivendi, which had previously praised Cattaneo for cutting costs at the indebted Italian firm, grew unhappy after he became embroiled in a row with Italy’s government over the rollout of ultrafast broadband.

This upset Vivendi, which is already under scrutiny for its growing influence in Italian business through its stake in TIM and a 30 percent share in private broadcaster Mediaset (MS.MI).

One source said on Friday that Vivendi had explored the possibility of limiting Cattaneo’s powers by appointing other managers but added that option was no longer on the table.

On July 11, Cattaneo denied rumours he might leave and said he would remain at TIM until the end of his mandate in 2020.

Genish, an Israeli citizen, was appointed Chief Convergence Officer of the French media group led by Vincent Bollore in January. He is a former head of Telefonica’s (TEF.MC) Brazil unit and founder of Brazilian telecoms company GVT.

Vivendi has since turned to him to integrate all the content it produces and delivers to clients. At Telecom Italia, he would work closely with chairman Arnaud de Puyfontaine, who is also Vivendi’s CEO.

Two sources said Giuseppe Recchi, currently TIM’s deputy chairman, could replace Cattaneo as CEO, though a third said the CEO job would not be filled for now.

Cattaneo has been negotiating his severance package and is close to an agreement, three sources said.

They said he would likely get less than the maximum 40 million euros ($47 million) he could claim under a clause in his contract. One source said he would get 32 million euros.

Cattaneo’s multi-million wage and benefit package envisaged a performance-based “special award” of up to 40 million euros - or 10 million for each of the four years of his mandate.

The award could be paid in its entirety in case of early departure, according to a company remuneration report.

STRAINED

After his predecessor Marco Patuano, Cattaneo is set to become the second CEO to leave since Vivendi tightened its grip on TIM.

One source said Cattaneo was viewed by the French group as too “independent”; another said there were divergences over Vivendi’s decision to sell TIM’s stake in broadcasting services group Persidera to win European Union approval for the French group’s plan to gain de facto control of TIM.

Cattaneo’s exit could raise more concerns in Rome about Vivendi’s sway over Italian business. In April, communications authority AGCOM ordered Vivendi to cut its stake in either TIM or Mediaset, ruling it was in breach of rules designed to prevent a concentration of power.

On Wednesday, Italy’s markets watchdog Consob ordered inspections at TIM’s offices to assess how much influence Vivendi has on the group’s management, sources said.

Additional reporting by Gwénaëlle Barzic in Paris, Stephen Jewkes and Stefano Rebaudo in Milan; Editing by Silvia Aloisi and Mark Potter

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