Telecom Italia kicks out CEO Amos Genish

In one of the least surprising board room purges ever, Telecom Italia (or TIM for short) has got rid of its CEO Amos Genish.

“TIM’s Board of Directors met today and deliberated by a majority vote to revoke with immediate effect all powers conferred to Director Amos Genish, giving mandate to the Chairman to resolve further obligations in relation to the existing working relationship with Genish,” said a TIM announcement today.

“In accordance with the succession plan for Executive Directors adopted by TIM, the proxies revoked to Director Amos Genish were provisionally assigned to the Chairman of the Board. The Chairman of the Nomination and Remuneration Committee has called for a meeting of the latter, in compliance with its responsibility in identifying the new CEO.

“A new meeting of the Board of Directors to appoint a new CEO was convened for November 18. The Board of Directors thanks Amos Genish for the work done in the interest of the Company and all its stakeholders in these fourteen months of intense activity.”

The removal of Genish had seemed inevitable since investor group Elliott won a battle with French conglomerate Vivendi, for control of the TIM board room, back in May of this year. Genish had previously been installed as CEO while Vivendi was still calling the shots, but after winning control Elliott made all the right noises about Genish having their full confidence.

This always seemed somewhat tenuous, with Genish’s loyalties presumably under suspicion and him providing at the very least a convenient scapegoat as and when things took a bad turn at the company. That came to pass last week when TIM said it was writing down the value of its assets by €2 billion and exacerbated by a disagreement between Genish and the board over what to do about TIM’s fixed line network.

Rumours emerged early this week that Genish’s days were numbered and that the board was about to convene a special meeting to agree on his demise. Hilariously TIM issued statements to the press denying such a thing was going to happen just a day or two before it did. TIM has a rich history of deceptive press communications but this outright lie was shameless even by its standards.

“This is a shock,” Analyst Paolo Pescatore of Midia Research told “However, ongoing turmoil at the company continues to drag it down. The company is very well placed given its assets and early move to secure a leadership position in 5G. Further tussles will hand its fierce rivals a competitive edge.”

So what next? Elliott apparently has less than a week to come up with an alternative CEO that will do its bidding and the remaining Vivendi board members will presumably oppose whoever they put forward. Above everything else, however, this is another opportunity to finally appoint a CEO whose first name is Tim. Surely everyone can agree on the importance of that.

Italians clearly aren’t that suspicious of Huawei

Despite governments around the world turning against Chinese vendors, Telecom Italia has agreed a new partnership with Huawei based on Software Defined Wide Area Network (SD-WAN) technology.

As part of a strategy aimed at evolving TIM’s network solutions for business customers, Huawei’s SD-WAN technology will be incorporated to create a new TIM service model which will allow customers companies to manage their networks through a single console.

“Today, more than ever, companies need networks that can adapt to different business needs over time, in particular to enable Cloud and VoIP services,” said Luigi Zabatta, Head of Fixed Offer for TIM Chief Business & Top Clients Office. “Thanks to the most advanced technologies available, these networks can be managed both jointly and by customers themselves through simple tools.

“The partnership with Huawei allows us to expand our value proposition for companies and to enrich our offer through the adoption of a technological model that is increasingly and rapidly emerging in the ICT industry.”

The partnership is a major win for Huawei considering the pressure the firm must be feeling over suspicions being peaked around the world. Just as more countries are clamping down on the ability for Huawei to do business, TIM has offered a windfall.

Aside from the on-going Chinese witch hunt over in the US, the Australians have banned Huawei from participating in the 5G bonanza and Korean telcos have left the vendor off preferred supplier lists. Just to add more misery, the UK is seemingly joining in on the trends.

In recent weeks, a letter was sent out from the Department of Digital, Culture, Media and Sport, and the National Cyber Security Centre, warning telcos of potential impacts to the 5G supply chain from the Future Telecom Infrastructure Review. China was not mentioned specifically, and neither was Huawei, but sceptical individuals might suggest China would be most squeezed by a security and resilience review.

The rest of the world might be tip-toeing around the big question of China, but this partnership suggests TIM doesn’t have the same reservations.

TIM shows off 5G capabilities at Rally Legend

Telecom Italia has taken to the sixteenth edition of Rally Legend to show off its 5G smarts in the test bed of San Marino.

The microstate, which is currently serving as the Telecom Italia 5G living lab, is the first state in Europe to experience the 5G euphoria, with the Rally Legend event, a car racing bonanza, the latest experiment.

“We are particularly delighted to be able to work alongside Rally Legend to demonstrate how new technologies can support sports events at an international level,” stated Cesare Pisani, CEO of TIM San Marino.

“With the ‘San Marino 5G’ project TIM aims to deliver technological excellence to the Republic of San Marino making it the first 5G State in Europe. The activities are proceeding in line with the plans agreed with local government and the switching on of the Serravalle Stadio antenna, together with uses that have already been implemented, represent a new important step along this path.”

After Secretary of State for the Territory and Tourism, Augusto Michelotti, switched on the new Serravalle Stadio 5G antenna the fun began. 360° cameras have been activated on the race track, allowing fans to experience the action through VR headsets, while the TIM streaming platform will broadcast the footage on large screens throughout the village. Aside from traditional cameras, live action cameras placed inside the cars and web operators who shoot footage of the race with their smartphones, will also contribute to the action.

While all the demonstrations and trials in San Marino are small scale, the lessons learned through the real-world lab will pay dividends ahead of the up-coming launch in Italy.

San Marino set to be first European 5G state – TIM

Telecom Italia has announced it expects 5G services to be greenlight in San Marino by the end of the year, making it the first 5G state in Europe. If only they had the handsets.

With TIM engineers plugging away in Faetano to hook up 3GPP Rel15 standard radio equipment with Massive-MIMO technology, the aim is to have complete 5G coverage by the end of the year. With the team back in head office running the final tests on 26 GHz millimetre waves in the 26.5-27.5 GHz frequency range, the hope is San Marino will become a living lab to test out new 5G services.

“The installation of the first 3GPP 5G site is the peak of a virtuous cycle of innovation launched by TIM a few years ago, working with the standardization bodies and contributing since the beginning to the ITU R ‘Vision’ recommendation which defined the founding concepts of 5G, subsequently guiding work on the technical specifications for 3GPP Rel15 and later,” said Elisabetta Romano, CTO at TIM.

“Nokia has developed an end-to-end 5G Future X portfolio that will deliver unprecedented capabilities and efficiencies for customers such as TIM, allowing them to transform their service offering,” said Marc Rouanne, President of Mobile Networks at Nokia. “Working together we will explore the potential of 5G services that align with TIM’s vision of meeting the future demands of a diverse range of industries and consumers.”

The first stages of the deployment plan were complete with various successful trials run over the 3.5 GHz frequency band, though it seems the 26 GHz millimetre waves is what is catching the attention of the team. Equipment will be deployed from September to move trials from the Turin R&D centre to the San Marino living lab, focusing on areas such as Industry 4.0, public safety, Smart Parking and Gas & Water Metering applications for smart cities and digital tourism, including virtual reality.

Having signed a memorandum of understanding with the government of the microstate in July last year, San Marino could actually be one of the first country’s in the world to experience the 5G bonanza. That said, this should not be taking as a sign things are all rosy across the European continent; hooking up a microstate with a land mass of 23.63 mi² and a population of just over 33,000 should be viewed as nothing more than an experiment for TIM. Europe still lags behind North America and Asia in the race to 5G, but progress is being made.

TIM considers assets sales as growth falters

Telecom Italia is considering its options for its various subsidiaries after revenues slipped over the first six months of 2018, while the Italian 5G auctions hover on the horizon.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 4.8% to €3.92 billion over the six month period while total revenues declined 2.7% to €9.51 billion. While the domestic business held steady for the moment, a slight year-on-year increase of 0.3%, the damage was done in the international wholesale business, down 5.7%, and in Brazil where revenues dropped 12.5%.

The long-term thinkers in the Italian business will now be under pressure. The convergence aspect of the business might be performing well enough, TIM quotes a 14% quarter-on-quarter increase in customers here, but the voices shouting about short-term share price and dividends will only be getting louder. According to Reuters, several conversations are underway to offload assets which would not be considered core to the business. Specific names have not been confirmed by TIM, though the management team has explicitly stated the Brazilian business is not up for sale in the past, and neither is its tower unit.

TIM does have minor brands in Italy, as well as stakes in broadcasting businesses and cable assets, though this diversification could come under threat as vocal investors start to gain a strangle hold on the fortunes of the business. Elliott has already drummed enough support to dominate the board of directors, though with these results falling below par, there might be enough ammunition for the activist investor to make a meaningful impact on the broader strategy.

The two sides of the argument are relatively simple. Vivendi is championing a long-term business model, which focuses on enhancing assets and the convergence business model. It might not be the most profitable in the short-term, but it is certainly one which would create a solid foundation for the telco in the future. Elliott on the other hand is acting exactly how you would expect; it is a vulture fund which focuses on identifying under-performing business and increasing share price in the short-term. The activist investor wants to trim costs and off-load assets to increase the dividend and share price.

One strategy is better for making money in the short-term, the second will create a business with an appropriate foundation to compete in the digital era. Unfortunately, with these results falling short of expectations, the short-term business plan might have been given more impetus.

The big complication here is CEO Amos Genish. Genish backs the long-term, convergence orientated business model, and any deviation would not be well received. There have been uncomfortable stand offs over the last couple of months, with some speculating Genish may walk should the board vote against the long-term strategy. Losing another CEO would be a disaster for TIM. This is a precarious position.

TIM moves to limit damage from inevitable clash between CEO and board

TIM CEO Amos Genish has been moaning about his executive board, which has prompted the inevitable damage limitation exercise.

In early May a battle to control the TIM boardroom between major shareholders Vivendi and Elliott resulted in victory for the latter. In spite of that Amos Genish, who seemed to be clearly favourable towards the Vivendi side, decided to hang around and was confirmed in the role immediately.

A brave face was put on things from all sides, but it was hard to imagine Genish was going to be totally happy with the new boardroom arrangements and it only took him a month or so to start moaning. The timing, ahead yesterday’s board meeting, was presumably not a coincidence.

Bloomberg reported him as saying the following to reporters: “Unfortunately there are some board members who are involved in feeding untrue and unreliable speculation, interfering with management’s day-by-day work. It’s just noise, not welcomed and not expected, but I won’t be intimidated from getting my job done.”

One of the things resulting from the board meeting was the following statement: “The Board of Directors discussed the comments openly made by the CEO about some Board members, acknowledging his clarifications on the matter and his regret for having made inappropriate comments, subsequently amplified by the media.  As a result of the discussion, the Board confirms that its members share a common vision and objectives for TIM, and continue to support the management team.”

Today we got another ‘clarification’ from TIM: With reference to the article published today in Il Messaggero “TIM, Genish: my comments about the BoD were inappropriate”, TIM hereby clarifies that any kind of speculation regarding the 5G auction reported in the article is groundless, and that any strategy of the Company to take part in it is absolutely premature.

And as for the supposed relationship between TIM and Bai &Company, TIM specifies it has no relations with the consultancy company on 5G and no knowledge of any Bain project on this topic.”

We’ve tried to find this article, even searching for ‘TIM, Genish dichiarazioni inappropriate le mie sul CdA’, but the only Il Messaggero piece published on the matter recently is some vanilla piece apparently parroting the official line from TIM. This implies TIM succeeded in getting Il Messagero to take the original piece down.

Genish, presumably, isn’t stupid and must have known what he was doing when he accused some of his board of briefing against him in the press. The subsequent climb-down was merely the inevitable choreographed set-piece required from such a statement, but Genish seems to be putting the Elliott dominated board on notice that he’s not going to stand for any funny business.

TIM-Mediaset tie up shows telcos are getting realistic about content

Telecom Italia and Mediaset have announced a strategic agreement that will allow TIMVision customers to watch all Mediaset free-to-air channels, as the telco moves towards the content aggregator role.

The convergence dream is one all telcos are chasing, though few have been able to find the magic formula for the mystic quad-play. This partnership between TIM and Mediaset perhaps shows how the telcos can add value to the content world, as opposed to trying to disrupt it, acting as the link between established players and customers.

As part of the deal, TIMVision customers will be able to access various Mediaset channels including Canale5, Italia1 and Retequattro, and will also be able to access programming from the previous seven days. Customers will be able to access the content from January 2019, as TIM drives the DigiTIM strategy forward, building a content offering which can compete with the traditional players. The difference here is that TIM is attempting to compete on grounds which are more logical.

This is shift in the industry which we have been expecting for a while, as numerous telco and technology firms attempted (unsuccessfully) to diversify revenues by creating content. Orange has been trying it without any massive success, while AT&T is battling the US government to fuel its own ambitions. We question whether attempting to infiltrate the content creator camp is the most logical step forward. Firstly, it is an established industry, and secondly, the way the business operates is completely different on a risk, operational and cultural basis.

TIM is taking the more logical route. It has customers, it has a platform, therefore why not populate that platform with other companies work. These companies are constantly looking for new ways to reach audiences, therefore a consolidated platform with 1.5 million subscribers, which acts as a content aggregator is an attractive proposition. It also plays to the advantages of the telcos; it is a functional business.

The telcos are not creative organizations. EE’s Kevin Bacon/Britney Spears/Ryan Reynolds adverts show there is little to be excited about the creative prospects of these organizations, but an aggregator platform does not require them to be imaginative or implement a bullish-risk approach. It allows them to do what they do best; deliver a functional and efficient service.

Diversification and convergence doesn’t have to be complicated or glamourous, all it has to be is realistic and valuable. This is a perfect example of how a telco can collaborate with an existing ecosystem and add value, without undertaking an unnecessary risk and disruptive strategies.

Elliott purges TIM boardroom but keeps hold of valuable Genish

Despite activist investor Elliott leading a coup d’état in the Telecom Italia boardroom, Vivendi man Amos Genish has confirmed he will continue as CEO, providing some much need stability for the Italian telco.

Elliott’s slate of nominees for the board winning the shareholder vote is perhaps nothing we should be surprised about, though securing the continued services of Genish was a bit more tenuous. With Elliott pushing the ‘pump and dump’ strategy, decimating the long-term vision of Genish, the CEO has hinted he may look longingly towards the fire escape should Elliott win control of the boardroom. Fortunately for TIM and its investors, Genish has agreed to stick around for the foreseeable future.

“Today, we have confirmed our full confidence in Amos Genish and his management team that we will support in the implementation of the 2018-2020 Strategic Plan,” said Chair of the Board of Directors, Fulvio Conti. “My long-term commitment to TIM, along with Amos’ one and his considerable industry experience, aims at further strengthening the Group and creating value for all our stakeholders.”

“I confirm my long-term commitment to the transformation of the Group, which aims to reaffirm TIM’s position as an international best in class business,” said Genish. “We are on the right track and have a great management team. The complete support of the new Board enables us to continue implementing the DigiTIM strategy, which is already bearing fruit and delivering the value TIM is capable of creating.”

The vote, which actually occurred last week, was by no-means a landslide. 49% voting in favour of Elliott’s slate, while 47% pushed for Vivendi. In winning the vote, Elliott now has ten representatives, while Vivendi selected the five most important from its own ten nominations. Yesterday (Monday May 7) was the first meeting of the new board, with the unanimous decision to reinstate Genish being announced late in the evening.

Securing dominance on the new Board of Directors was of course the primary objective for the disruptive Elliott, though it would have meant nothing if Genish has exited the business. Without Gernish, TIM would have been appointing its fourth CEO in a period of just over 18 months, creating the image of a business hanging on by a thread. This would not be good for TIM share price.

Financial markets love stability. Investors do get excited about the appointment of an international heavyweight as CEO, but a new boss means a new plan. That does not reinforce the idea of stability or making money. TIM has a strategy, which has taken a while to develop, and now for the first time in years it has to start moving in the right direction.

This is partly why this victory for Elliott should be seen as slightly hollow. It does have control of the boardroom, but to keep Genish at the business it has had to water down its demands and objectives. Selling off assets is now highly unlikely, as is the reintroduction of a dividend. Investment in the network might continue, though it is likely to be lessened. Elliott will allow Genish to follow through on the DigiTIM strategy, but it is unlikely to be as bold as the first draft.

TIM finds itself in quite an awkward position now; moving forward with a strategy which is wholeheartedly supported by a minority of board members. Elliott’s objectives have always been clear, reintroduce the dividend, increase share price quickly and sell the TIM stake for a profit. But Genish’s and Vivendi’s DigiTIM plan is a long-term one. It requires investment, patience and diplomacy, three traits which are seemingly contradictory to the Elliott business model.

While there is still a lot of support for Genish and his plan, the impact on the business is now questionable. Unless Elliott throws all its weight behind a long-term business strategy, which is potentially capital heavy, it is only going to fail. How this new dynamic plays out remains to be seen, but we are not entirely confident.