June 1, 2017 / 3:15 PM / 2 months ago

Telecom Italia appoints Vivendi's CEO as chairman

4 Min Read

Vivendi's Chief Executive Arnaud de Puyfontaine attends the company's shareholders meeting in Paris, France, April 25, 2017.Jean-Paul Pelissier

MILAN (Reuters) - Telecom Italia appointed Vivendi's chief executive Arnaud de Puyfontaine as its executive chairman on Thursday as the French media group further tightens its grip on Italy's former monopoly telecoms network operator.

The move was widely expected after Vivendi, which is Telecom Italia's top investor with a 24 percent stake, won a conditional approval by the EU antitrust watchdog earlier this week for its plan to take control of the Italian company.

Vivendi had already strengthened its control of Telecom Italia last month by gaining two-thirds of the new 15-seat board for its own nominees, including de Puyfontaine and two other Vivendi executives.

However, it refrained from replacing the chairman at the time, leaving Giuseppe Recchi in the post which he has held since 2014, pending the EU ruling.

De Puyfontaine will be responsible among other things for overseeing the development and implementation of Telecom Italia's strategy, the company said in a statement.

But it said he will not supervise Telecom Italia's Sparkle international telecoms services arm, a business regarded by Italy as strategic and politically sensitive because of its submarine network which connects to countries in Europe, the Mediterranean and the Americas.

Recchi steps down to become deputy chairman, Telecom Italia said in a statement, while Vivendi said De Puyfontaine would also continue to serve as its CEO.

The French group, headed by billionaire Vincent Bollore, its biggest shareholder, has long set its sights on creating a media powerhouse in southern Europe.

"Vivendi confirms its commitment over the long term with a view to developing a convergence strategy between telecommunications and content," the company said in a statement.

But its growing influence on Italian companies has come under scrutiny after it built up last year an unwelcome stake in Italian TV group Mediaset, controlled by the family of former prime minister Silvio Berlusconi.

The market has long speculated about Bollore's real intentions in Italy as pressure mounts for European media and telecoms groups to come together in the face of increasing competition from online content providers such as Netflix and Amazon.

Italian media reports have repeatedly suggested there might be a tie-up between Mediaset and Telecom Italia or a merger between the Italian phone company and France's Orange.

In April Italy's communications regulator AGCOM told Vivendi to cut its stake in either Telecom Italia or Mediaset within a year to comply with rules designed to prevent a concentration of power.

Vivendi has to present a plan explaining what it intends to do by mid-June but it is expected to lodge an appeal against the regulator's decision before then.

On Thursday, Bollore said it made sense for the company to work with Mediaset.

He also said the more immediate issue for Telecom Italia now was to prepare for the arrival of French telecoms operator Iliad in the Italian mobile telecoms market.

Iliad, founded and controlled by maverick billionaire Xavier Niel, is set to launch in Italy by early next year, raising prospects of a new price war.

Bollore is also a key shareholder in influential Italian investment bank Mediobanca (MDBI.MI), which controls insurer Generali.

Writing by Stephen Jewkes and Silvia Aloisi; Editing by Greg Mahlich

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