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By Maria Pia Quaglia
MILAN, Nov 19 (Reuters) - Italian funds who are investors in Telecom Italia are worried that Vivendi, the company’s top shareholder, might gain too much influence if it manages to secure nearly a quarter of all board seats, a senior industry source said.
The French media group wants to increase the number of board members to 17 from the current 13 and appoint three top Vivendi executives and a French consultant as its representatives at a mid-December shareholder meeting.
Vivendi replaced Telefonica as TI’s single largest shareholder in June after taking the Spanish group’s remaining 8.3 percent stake in part-payment for selling its Brazilian broadband business GVT to Telefonica Brasil.
The French company then began buying additional shares following the dissolution of the Telco investment vehicle that previously held an unusually powerful 22.4 percent stake in TI on behalf of Telefonica and three Italian financial institutions.
Earlier this week Vivendi disclosed that it now owns 20.116 percent of TI and the source said Italian funds were worried they would see their own influence on TI’s board diluted once again. They hold only 5 percent of the company but select board members to represent all institutional investors.
Foreign funds control 60 percent of TI.
When the current board was elected in April 2014, the Italian funds’ list of nominees got 50.3 percent of total votes.
“Vivendi seems to be acting more like an activist fund”, the source said, adding a decision on how to vote in December had yet to be taken.
The December meeting has been called to approve a recent plan to convert the company’s 6.03 billion savings shares into ordinary stock, which would dilute existing ordinary shareholders.
Vivendi, whose chairman and top investor is influential French businessman Vincent Bollore, refrained at first from asking for board representation and in September Vivendi CEO Arnaud de Puyfontaine said the issue was not on the table.
Since then, however, another French billionaire has emerged as potentially the second biggest investor in TI, with Xavier Niel, the founder of French telecoms group Iliad, having disclosed he holds call options relating to a 15.1 percent stake in TI.
Bollore and Niel have denied acting in concert but their intentions remain unclear.
Two sources close to the government said Rome was monitoring the situation but was not surprised by Vivendi’s move.
Sergio Carbonara, founder of Italian proxy adviser Frontis Governance, said Vivendi would be over-represented if it won 23 percent of the Italian company’s board, with a stake set to fall to below 14 percent once the savings shares are converted.
“The most worrying thing is that Vivendi may have a strong say with a small stake given that its business is to some extent similar,” he said, alluding to the increasing convergence of telecoms and media markets.
“We risk going back to the time when Telco held sway over the board with a 22 percent stake. It could be seen as a step backwards in terms of governance.”
Bollore, a key shareholder in powerful Italian investment bank Mediobanca, is also seen as close to former Prime Minister Silvio Berlusconi who controls the country’s biggest commercial broadcaster Mediaset.
“Vivendi’s interests could potentially conflict with those of Telecom Italia,” Carbonara said. (Additional reporting by Paolo Biondi, Stephen Jewkes, and Valentina Za; Editing by Paola Arosio, Greg Mahlich)