The two favourites for TIM CEO job revealed – source

A source close to Vivendi has revealed the names of the two people they think are most likely to get the TIM CEO job vacated this week by Amos Genish.

They are Alfredo Altavilla and Luigi Gubitosi, both current TIM board members, who were proposed by activist investor group Elliott when it purged the board after winning its struggle with Vivendi in May of this year. If Altavilla got the gig he would have the added benefit of being the Chairman of the TIM Nomination and Remuneration Committee, which sets executive pay.

The same source, who spoke to us on condition of anonymity, also advised that Genish was about to get on the plane to Korea to sign a new 5G deal with Samsung last Sunday (11/11) when he read rumours of his demise. Apparently he got in touch with TIM Chairman Fulvio Conti, also proposed by Elliott, who gave him written confirmation that they were greatly exaggerated and that no board meeting had been scheduled. On the back on this Genish got on the plane, only to be told just two days later that the meeting had taken place and that he was history.

“It is ironic that the people who worked together to oust Amos Genish are now fighting for his job and the company is in more disarray than ever,” said the source. They also advised that Genish feel betrayed by the people who conspired to get rid of him, although he plans to fight on as a board member.

If our admittedly pro-Vivendi source is correct and Elliott is successful in installing once of its people as CEO then it will have run out of scapegoats. TIM will have an Elliot board and an Elliott CEO, so the buck stops there regarding its business performance. How Vivendi reacts to such an outcome will be critical and it could push for another AGM and board vote.

We have contacted TIM for comment and are awaiting response.

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.

Italian 5G spectrum orgy reaches its climax

The frenzy of bidding for mid frequency 5G spectrum in Italy has come to a climax with operators’ cash reserves apparently spent.

The hot action took place around the 3.7 GHz band, where the relatively small amount of spectrum on offer – 200 MHz – and the presence of a new fourth player – Iliad – ensured supply outstripped demand. When we last checked in the bidding had already become frenzied, but they still managed to keep it up for another nine days.

As you can see from the final table published by Italy’s Ministry of Economic Development below, the final amount of cash trousered by the Italian government was €6.5 billion, around three times more than was expected at the start of the process. In hindsight that seems pretty naïve, especially when it came to demand for 3.7 GHz spectrum, but then again Italian operators have paid way more than any other European country for this decidedly limited spectrum.

We could go through all the European 5G auctions ourselves in order to calculate the average price per MHz paid for mid frequency spectrum, but why bother when Iain Morris from Light Reading has already done so and we can just rip off his work?

In Finland’s recent auction 390 MHz of mid frequency spectrum was offered up to three operators. At least in part due to there being so much more spectrum on offer the Finnish operators only shelled out the equivalent of four cents per MHz, according to Morris. The traditionally exuberant UK operators dropped 15 cents per MHz in their equivalent auction but the Italians dwarfed that in dropping 42 cents per MHz.

Telecom Italia seemed happy with the outcome in a press release. “By securing all three band frequencies put on auction, TIM strengthens its network leadership in Italy,” said CEO Amos Genish. “The new frequencies acquired represent a core asset for the Group’s future development and, at the same time, for the ongoing digitization of Italy.” The release also said the 26 GHz block was 200 MHz wide, which was presumably the case for everyone.

Italy 5G auction final

TIM looks to Nextel to boost Brazilian armoury

Telecom Italia is reportedly scouring through bank statements, trying to figure out whether it can purchase Nextel Telecommunicacoes in an effort to boost market share.

The move itself might be considered by some as somewhat of an unusual one. With activist investor Elliott Management pulls the strings of nine board members, the business has seemingly been favouring strategies which would return cash to investors across a shorter period of time. One of these ideas might have been a disposal of assets, making any acquisition rumours slightly out of the ordinary.

According to Bloomberg, TIM is considering the move to absorb the fifth largest Brazilian telco to improve market share and spectrum holding in certain parts of the market. The Brazilian business is the only market of genuine note for TIM outside of Italy, and has been aiding the overall performance for the group, though the emergence of acquisition rumours are slightly unusual. Brazil is a highly competitive market, there are seven telcos of note and hundreds of minor regionalised companies, which does not make it seem like a bet of particular value to the short-termist investor.

CEO Amos Genish and certain executives do have an eye cast on the long-term, and most likely greater, success of Telecom Italia with the TIM2020 strategy, though you cannot argue with the majority. Thanks to some pretty effective rousing and sh*t-stirring, Elliott now has control of the board. It might not want to rock the boat too much when it comes to altering the TIM2020 strategy, losing Genish at this point would not be healthy for anyone involved, though we suspect it might have enough muscle on the board to quell any ambitions for expensive acquisitions.

For a telecommunications company which has its eye on the distant horizon and is concentrating on building value in the business for the greater gains in the long-run, this acquisition makes sense. However, with Elliott Management pulling the strings, strings which do not have much slack, we find it hard to believe rumours are not focused on more short-term profitability.

Why would such a short-termist investor allow the board to entertain an idea which will possible decrease profitability, reduce free cash and continue the trend of absent dividends, which has existed since 2013. This doesn’t quite make sense to us.

TIM’s 5G living lab moves forward with smart factory

Telecom Italia’s San Marino business has signed an agreement with Robopac to jointly develop new production technologies using 5G.

While San Marino might not be anything more than a spec of colour on the European map for some, it is a very useful little living lab for Telecom Italia to test out the glorious ideas made possible through 5G, before launching in larger markets. After announcing the microstate would be the first in Europe to hit the 5G on-switch, this Robopac partnership is one of these 5G experiments.

“There has been real talk of Industry 4.0 for the last several years,” said Cesare Pisani, TIM San Marino CEO. “With the introduction of fifth generation mobile networks, this new industrial revolution will take even better shape, radically transforming production activities. Our objective is to guide companies through this transformation process, demonstrating how industrial and digital production plants can leverage the potential of 5G.”

As part of the partnership, the pair will look to develop several aspect of the smart factory focusing on robotics and self-driving vehicles in the logistics and goods handling sector. The concept of the smart factory has been bumping around for years, though it is certainly starting to become a bit more real.

“The chance to test these technologies is a unique opportunity for Robopac,” said CEO Enrico Aureli. “The simultaneous use of sophisticated sensors and high capacity communication networks, like 4G and 5G, and the transfer of data to cloud systems for constant monitoring, will represent a new ecosystem with which to review the whole production chain.”

It might not be anything more than a minor POC for the moment, though creating a niche service for the manufacturing industry would certainly be a sensible move for TIM.

Italy trousers €2 billion in pre-5G 700 MHz auction

A spectrum action in Italy covering a bunch of bands has concluded its first phase with prices roughly in line with expectations.

Bidding is underway on spectrum in the 700 MHz, 3.7 GHz and 26 GHz bands, but only the former has concluded. The starting price was €338 million per 2×5 MHz block of 700 MHz spectrum and TIM, Vodafone and Iliad all got 2×10 paired. Iliad apparently didn’t need to bid but the other two don’t seem to have craven the price up much as you can see from the table below.

Wind didn’t get any 700 MHz spectrum, but seems to be pretty keen on some 3.7 GHz action, having bid €338.5 mil for an apparently pre-specified 80 MHz block of it. TIM is leading the chase for the only other 80 MHz chunk, with Iliad apparently content with 20 GHz and Wind the front runner for the other 20 MHz. A contiguous 100 MHz block of 3.7 GHz would come in handy but it seems likely that Wind is bidding against Vodafone for that bit.

TIM issued an announcement gloating about the fact that it now has spectrum in every sub-1 GHz band available. “This important result increases the frequencies available to TIM which are essential for the 5G services,” said the TIM statement. “The new spectrum will be added to the 20+20 MHz that TIM has in the low frequency 800 MHz and 900 MHz bands, which already ensure the supply of UBB services to more than 98% of the population.”

It seems sensible to have a great big auction of a bunch of different spectrum, given the imminence of 5G in the wild. Iliad has been guaranteed a nice lot of 700 MHz, which will help a lot with coverage, but it might want to have another bid for that bigger block of 3.7 GHz if it want to be a significant 5G player. You can read further analysis on this at Light Reading here.

Italy 700 MHz auction table

Elliott slaps Vivendi down over TIM rant

Activist investor Elliott Advisors has hit back following criticism of TIM by French conglomerate Vivendi.

Last week Vivendi, which lost control of the TIM board to Elliott earlier this year, decided to issue a public diss of TIM, with the apparent aim of showing what a rubbish job Elliott is doing. The core of the argument was that the share price is down since it lost and furthermore there has been some gossip in the press.

For such a massive and well-resourced company that was a pretty weak effort and Elliott seems to have had little trouble drafting a dismissive rebuttal. You can see the full statement below, but it essentially comes down to: the share price has always sucked, Vivendi is largely responsible for any of TIM’s flaws and Elliott doesn’t even control the TIM board anyway.

Elliott notes Vivendi’s statement of September 5th. Elliott shares Vivendi’s concern about the share-price performance of Telecom Italia (“TIM”), a problem that has persisted for years. Yet Elliott is disappointed that Vivendi has chosen to attack TIM’s management, its Board and one of its fellow shareholders rather than work toward constructive solutions.

Vivendi seems to have fallen prey to the “short-termism” it has previously decried. After its own multi-year tenure as acknowledged controlling shareholder, Vivendi appears ready to cast final judgement on TIM’s new Board just four months after it was appointed. How can Vivendi avoid responsibility for the state of affairs at TIM when it was in charge for so long and the new Board has been seated for so little time?

Vivendi also criticizes the “disastrous” management of TIM. While we disagree that management of TIM has been “disastrous,” it is worth noting that TIM’s independent Board has not made any significant management changes at TIM: Vivendi’s Board appointed the current CEO, and both the CEO and CFO remain in their positions.

Among a number of misleading comments in its September 5th statement, Vivendi falsely asserts that Elliott “promised” a doubling of TIM’s share price. Elliott did not and does not make “promises” to the market. It is true that Elliott offered an assessment of the upside potential to the TIM share price over the medium term if a revised, independent board adopted Elliott’s value-creation recommendations. To date, the Board has not adopted any of those recommendations. Instead, the Board has thus far adhered to Vivendi’s own approach. As TIM’s Chairman Fulvio Conti noted on Friday, “We are executing a plan that has been devised and approved by [Vivendi] and actually promoted by [Vivendi].”

In its September 5th statement, Vivendi again confuses the proper role of a shareholder, asserting that Elliott has taken “control” of the board. Elliott does not control TIM’s board. Vivendi’s approach to corporate governance — one of apparent complete disregard for board independence — is among the many reasons TIM’s shareholders overwhelmingly voted for change earlier this year.

Elliott encourages TIM shareholders to give the new Board time to show that they can create value for TIM shareholders in what is obviously a difficult environment for Italian stocks and Telcos in general. Vivendi still has significant representation on TIM’s Board. If Vivendi now takes the view that fresh ideas are needed, Elliott would welcome its help in promoting value-creative solutions at the Board level.

It’s hard to imagine what Vivendi thought its half-arsed attempt at propaganda might achieve. Elliott has quite rightly swatted it aside and the lingering impression is of a spoilt child having a tantrum because it didn’t get its own way. It’s possible this was the first salvo in a propaganda campaign designed to culminate in another boardroom battle at the next AGM, but Vivendi will need to significantly raise its game if wants a different outcome.

Vivendi inevitably moans about TIM now that it’s not running it

French telecoms and media conglomerate Vivendi has issued a statement saying how rubbish Italian operator group TIM has been since Vivendi lost control of the boardroom.

Back in May Vivendi lost out to activist investor firm Elliott in a battle to install their respective proxies on the TIM board of directors. Despite the fact that Vivendi’s chosen CEO, Amos Genish, remains at the helm, TIM’s share price has gone down the toilet since then. As Vivendi still owns nearly a quarter of those shares, this decline adds insult to injury.

Here’s the Vivendi statement in full.

Vivendi is deeply concerned by the disastrous management of Telecom Italia (TIM) since Elliott took control of its Board of Directors following the May 4, 2018 Shareholders Meeting:

  • The stock market performance is dramatic: TIM’s share price dropped about 35% since May 4, 2018, and is at its lowest level in five years while in its April 9, 2018 position paper, Elliott promised a doubling of the share price over the next two years.
  • The new governance team is failing: the spreading of rumors (including the departure of the CEO) is causing dysfunction that is harmful to the smooth operation and results of TIM.

Vivendi, its largest shareholder with 24% of the shares, remains convinced of TIM’s significant development potential.

The second bullet point seems pretty thin. Companies like Vivendi routinely insist they don’t comment on rumours and speculation and yet, when it suits them, the existence of rumours that, for all we know, could have originated from sources sympathetic to Vivendi itself, are used as primary evidence of corporate disfunction. Where, for example, might rumours about the CEO leaving have come from?

TIM, of course, is having none of it. Here’s Tim’s counter-statement in full.

TIM’s Chairman, Fulvio Conti, is deeply disappointed by the groundless and absurd accusations – which he rejects – made by Vivendi about the company’s operations.

Since its appointment the Board has been and still is focused on the execution of the Strategic Plan, outlined by Vivendi itself during its management.

TIM is a relevant player in Italy’s economy, with over 50k employees, more than 40 million lines between mobile and landline, able to confront the evolution of the market and competition, as shown by the H1 2018 results.

Finally, the concentration of negative elements coming from the other side of the Alps and influencing the share price is paradoxical for Vivendi.

TIM’s role in Italy’s economy seems entirely irrelevant to this spat and its invocation just serves to illustrate how petty and superficial this tug of love between Elliott and Vivendi has always been. The reference to the Alps was fun, though, and it would appear to be highly symbolic that Conti rather than Genish issed the counter-statement.

It’s not immediately obvious what Vivendi hopes to achieve from issuing such an announcement, apart maybe from some brief catharsis. In the longer term it probably has its eyes set on the next TIM AGM, at which it will presumably bid to reclaim control of the board room. And if TIM’s share price hasn’t recovered significantly by then it may well win too.