As expected TIM delays shareholder meeting and Vivendi moans

The TIM board met today to discuss Vivendi’s request for a shareholder meeting and decided it can wait until the end of March.

This outcome had been widely expected and Vivendi already had its public moan written in advance. “Vivendi deplores the time-wasting tactics used by the Elliott Board members of Telecom Italia (TIM) who have decided to delay until March 29 the holding of a Shareholders’ Meeting, contrary to the company’s by-laws and the Italian Civil Code,” thundered the Vivendi release.

Just to remind you, ten out of the 15 TIM board members were proposed by Elliott and five by Vivendi. There was a time when the opposite was true and Vivendi regards that time with deep longing. That’s why it wants another vote in which it hopes to regain control of the board. If it ever is successful in that respect it will, of course, be guilty of none of the self-interested behaviour it accuses Elliot of.

“These time-wasting tactics are negatively impacting TIM’s financial results every day, as is sadly reflected by the more than 40% drop in the share price since May 4, 2018,” persisted Vivendi. “These tactics constitute a genuine denial of shareholder democracy and run counter to the most basic and fundamental principles of good corporate governance.”

Here’s what TIM announced following the meeting:

In taking this decision by a majority vote, the Board of Directors considered the motivations the shareholder has given for making this request, and the company’s interest in a (single) meeting to discuss the various issues the shareholders are called to resolve on, so as to:

- facilitate the completion of the processes to approve and disclose the strategic plan, the related impairment test on goodwill and hence the financial statements, and thus

- ensure that the shareholders have a proper and adequate information set,

while also promoting the greatest possible participation in a shareholders’ meeting, in which there is likely to be a substantial confrontation on what the industrial future of the Company is to be and on the people its management should be entrusted to.

There was plenty more but you get the gist. The Elliott-dominated TIM board has to grant Vivendi’s request eventually but it doesn’t see any reason why it should be in any hurry about it. The nature of corporate shenanigans means it can’t just say “we can’t be bothered for now” so it needs to give the decision a veneer of due process. There doesn’t seem to be much Vivendi can do about it, however, so things may go quiet on this story for another couple of months.

Vivendi war with Elliott over TIM set to escalate

Ahead of a TIM board meeting today Vivendi and TIM Chairman Fulvio Conti have been publicly bitching at each other.

An unnamed Vivendi spokesperson got in touch with the Sunday Times to brief against Conti yesterday, accusing him of failing to represent all shareholders. Vivendi is a 24% shareholder in TIM and has been upset ever since it lost control of the board to activist investor Elliott last year and has consistently questioned Conti’s impartiality.

Vivendi wants another vote on the composition of the TIM board, with the apparent aim of restoring its control. TIM has been slow to grant this request, prompting Vivendi to accuse Conti of carry out ‘absurd time-wasting tactics’. “The Chairman [of Vivendi, presumably] feels he [Conti, presumably] no longer represents Telecom’s shareholders as a whole and is therefore trying to avoid a democratic vote,” the mystery Vivendi spokesperson is quoted as saying in the ST piece.

In possible anticipation of the ST piece TIM issued a rambling statement from Conti on late on Friday that he may have dictated after his first grappa of the evening. Here it is in full.

Vivendi is always able to surprise me, ascribing me powers I do not have. Truth is, I am Chairman of a Board of Directors that has a significant presence of Vivendi-appointed members (including the Vivendi CEO), along with nine members – including me – with renowned standing that have complete autonomy of judgement.  I also remind that the Vivendi-appointed Directors have, in the past, had the opportunity to hear me during Board meetings asking them not to discuss TIM matters when markets are open. Evidently, I was not clear enough.

On the specific topic, I work in the interest of all shareholders, and by respecting the shareholder with 24% I cannot neglect to take into account the remaining 76%. If Vivendi has at heart the rules of a democratic vote, it will have to await the convening of the shareholders meeting which will be deliberated by the next Board of Directors on January 14, and this shall happen in complete autonomy, respecting the Civil Code which provides for the convening of an Assembly within 30 days of the request. This call date must take into account the interests of shareholders and the interests of the company. I inform the gentlemen at Vivendi that the civil code, in contrast to what the Vivendi spokesperson said, does not provide for a specific time limit to convene the shareholders meeting, but entrusts the Board of Directors to determine a correct date to hold it appropriate for all the interests at play.

With regard to the management issue, I have not personally orchestrated anything, but acknowledged the will of the majority of the Board of Directors whose vote expresses its loss of confidence in the former CEO Amos Genish. More than the management powers that Vivendi’s spokesman attributes me, I would like to draw attention to the years in which Vivendi has led TIM compared to my full 4 days.

While all this gives telecoms hacks something to write about on a Monday morning, these public statements are aimed squarely at TIM shareholders, who Vivendi wants to push for this new vote. An announcement is expected from TIM later today and understands the Telecom Italia board will look to delay a vote around the election of new board members. This will lead to further public moaning from Vivendi, so watch this space.

Vivendi doesn’t think the TIM board is independent enough – hmm

As promised Vivendi has written to the board of Italian operator group TIM in a bid to replace Elliott-nominated members with its own proposed ones.

Here’s the entire text of the letter, dated 14 December 2018: ‘As announced on December 11, 2018, Vivendi wrote today to the Telecom Italia Board of Directors to urge it to convene a Shareholders’ Meeting as soon as possible to vote for the appointment of new financial Auditors.

‘Vivendi also asked that the agenda of the Shareholders’ Meeting includes a vote on the revocation of five Board members from the Elliott list who showed a substantial lack of independence and disrespect for the most basic and fundamental corporate governance rules, negatively affecting the organization and image of Telecom Italia. The Board members concerned by this revocation are: Fulvio Conti, Alfredo Altavilla, Massimo Ferrari, Dante Roscini and Paola Giannotti de Ponti.

‘To replace them, Vivendi asked that five new Board members be proposed to the Shareholders’ Meeting, all independent candidates with strong expertise and proven track records. The candidates proposed include four Italians and are: Flavia Mazzarella, Franco Bernabè, Gabriele Galateri di Genola, Rob van der Valk and Francesco Vatalaro.

‘Biographies of the candidates proposed as Board members are attached.’

The details of this disrespect for corporate governance rules are omitted from the letter as are the details of what these five board members did to show their lack of independence. There was an additional report attached to the letter, however, that does offer more.

Conti is accused of acting in bad faith during the process to turf out the previous Vivendi-supported CEO Amos Genish. Roscini is Lead Independent Director, but is accused of keeping stuff from the Vivendi-nominated ones. Ferrari is accused of speaking out of turn to the press, Altavilla of plotting Genish’s demise, and De Ponti of being complicit in that plot. Basically they’re all accused of acting in bad faith over the Genish sacking.

Cries of board bias are a bit rich coming from Vivendi which, until earlier this year, had the board stacked mainly with its own nominees. Most of them were nominally ‘independent’, but such was the influence Vivendi was apparently able to exert over the board that the Italian securities regulator was moved to proclaim it had de facto control of the company.

Now that Elliot is enjoying equivalent de facto control of the company Vivendi is crying ‘no fair’, but you can’t have it both ways guys. The Vivendi report stresses it doesn’t have any desire to take control of TIM but given its past form in that area, such claims are difficult to swallow. TIM has published a short announcement acknowledging receipt of the letter and noting that it has already said it will be looking into the auditor situation next month.

Vivendi inevitably tries to get rid of some Elliott directors

It was just a matter time before Vivendi reacted to its man being sacked as CEO of TIM and replaced by an Elliott ally.

A month ago the artist formerly known as Telecom Italia sacked its CEO, Amos Genish. The general assumption was that this was due to a disagreement between Genish and the board, which is dominated by activist investor Elliott. But since Genish was appointed back when Vivendi dominated the board, it was assumed to be just a matter of time before Elliott got rid of him.

Within a week TIM had a new CEO, Luigi Gubitosi, who just happened to be one of the people on the board nominated by Elliott. There was a bit of subsequent moaning, but the real action was always expected to be a renewed attempt by Vivendi to regain control of the board and, presumably, replace the CEO once more.

The method of doing so had been strongly hinted at in Vivendi’s initial response to Genish’s sacking. On the same day TIM issued a statement in response to public comments from Vivendi, the key section of which was went as follows.

‘As for Vivendi’s statement that it “deplores” the decision to not call a shareholders’ meeting to renew the external auditors, it should be noted that this statement is untruthful (since the BoD has not yet made any decision on this point) and misleading (given that no law requires the external auditors to be appointed before the shareholders’ meeting that will be called to approve the financial statements as at 31 December 2018).’

Last week TIM’s board convened, made one or two committee appointments and did a few other bits of corporate housekeeping, but didn’t address the external auditor thing. This was all the pretext Vivendi needed to make another move on the board and it made the following statement in a press release today.

‘In spite of the recent strong recommendation by the Collegio Sindacale (Statutory Auditors), the Telecom Italia Board, composed by a majority of Elliott backed Board members, decided on the 6th December not to convene an immediate Shareholders’ Meeting to vote for the appointment of new financial Auditors.

‘This decision, like many others before, goes against all the rules of proper corporate governance and is a source of disorganization.

‘For this reason, Vivendi has decided to write to the Board before the end of the week, to urge it to convene a Shareholders’ Meeting as soon as possible to appoint new financial auditors, revoke five current Board members from the Elliott list of ten, particularly those who were involved in these governance issues, and propose five new ones.’

There are 15 people on the TIM board. Currently ten of them were proposed by Elliott and five by Vivendi, so Vivendi needs a swing of at least three to regain control. We asked TIM for comment but they had nothing to add at this stage. It seems unlikely that TIM would be anything other than hostile to Vivendi’s demands, so we can expect another round of public lobbying of TIM shareholders by both parties as they continue to try to impose their will on the company.

Genish and Elliott embark on inevitable war of words

The only surprising thing about ousted TIM CEO Genish publicly attacking Elliott was that it took so long.

A week ago Amos Genish was removed as CEO of Italian telecoms group TIM by a board dominated by activist investors Elliott. They then replaced him sharpish with once of their own board nominees, Luigi Gubitosi, who will presumably enact those Elliott plans for the company that Vivendi-nominated board member Genish had resisted.

We get the impression that Genish has been mucked about a fair bit in this process, having apparently been reassured just a couple of days before he was sacked that he wouldn’t be. But his biggest issue seems to be with the overall boss of Elliott, Paul Singer, who he claims personally convinced him to hang around after Elliott had grabbed control of the TIM board.

In an interview with the Telegraph Genish said “Immediately after the AGM, Paul Singer called me and over a long call convinced me we have shared values, shared history and a common vision. He said that he fully supported me and the plan, and asked me to stay.

“I was naïve to believe him. I forgot that I was dealing with a raider and not with what you would call an activist. That’s too positive a name to give to this hedge fund. Clearly they switched their position very quickly and that’s where we are.”

It’s telling that he concedes his naivety. Elliott clearly had a massive interest in Genish hanging around in the short term, to avoid an investor panic if he had left immediately after the AGM. On that basis Singer was bound to tell him what he wanted to hear. We trust Genish wasn’t so naïve as to fail to negotiate a nice, fat payoff in the event of him getting turfed our prematurely.

Anyway, Elliott wasn’t about to take this level of moaning without a response and here’s what we got from one of its spokespeople. “Mr Genish had the opportunity to create value; we supported him. In actuality, he proved to be an impediment to value creation and the uncertainty as to his allegiances created disharmony with the Board.

“Total shareholder returns during Mr Genish’s tenure were -33.5%. For this reason, the Board had to let him go. Although Elliott had no foreknowledge of Mr Genish’s removal, we support the Board’s decision to remove him. The Board now has the opportunity to do the right thing and to act in the best interests of all stakeholders, by adopting Elliott’s value creation plan. We are confident that Mr Gubitosi can and will do better than Mr Genish did.”

If Elliott insists it had no part to play in Genish’s removal then we have to believe them in the absence of any evidence to the contrary, but that’s clearly not how Genish sees things. Vivendi has stayed pretty quiet throughout all this drama but it must surely be a matter of time before it gets its big guns out. Keep it up please, it makes for great copy.

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.

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.

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.