March 29, 2017 / 6:25 PM / 4 months ago

UPDATE 1-Vivendi may propose own CEO as Telecom Italia chairman -sources

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MILAN/PARIS, March 29 (Reuters) - Vivendi is considering putting its chief executive Arnaud de Puyfontaine forward as Telecom Italia's next chairman, sources told Reuters, potentially aggravating concerns about the French group's growing influence over Italian companies.

The board of Telecom Italia, of which Vivendi is the top shareholder with 24 percent, comes up for renewal in May. Giuseppe Recchi currently serves as the Italian phone group's chairman, while de Puyfontaine acts as his deputy.

Vivendi's influence at Telecom Italia has come under the spotlight after it took a significant holding in Italian broadcaster Mediaset, leading to speculation over whether it plans to combine the two companies.

No final decision has been taken over who will be proposed as chairman of Telecom Italia and Recchi could be confirmed in his post, two of the sources said on Wednesday.

"There are only two rationale choices: either keeping Recchi or replacing him with someone who represents the interests of the No. 1 shareholder," one source said. "Having a Vivendi guy as head of Telecom Italia's board would make sense."

If de Puyfontaine were appointed chairman he would likely assume the post without the executive powers held by Recchi in a bid to defuse some of the concerns over Vivendi's influence at Telecom Italia, the source added.

Vivendi and Telecom Italia declined to comment.

Any proposal by Vivendi will have to be approved by Telecom Italia's shareholders and lists detailing the proposed candidates have to be submitted by April 9.

Italy's communications regulator is already looking into Vivendi's stakebuilding at Mediaset, given domestic anti-trust regulations that prevent companies from having an excessive market share both in telecommunications and media.

"The choice of de Puyfontaine as chairman seems legitimate but Vivendi would run the risk of clashing with Rome and regulators in a country where the state still tends to exercise some undue influence over the private sector," Andrea Giuricin, CEO at TRA Consulting, said.

Vivendi is chaired by tycoon Vincent Bollore, who already has some sway in Italy's business world as key shareholder of influential investment bank Mediobanca, which in turn is the biggest investor in insurer Generali.

Since becoming a Telecom Italia investor in 2015, Vivendi has increasingly taken an active role at the heavily-indebted Italian group and secured four seats on its board.

Former Telecom Italia CEO Marco Patuano was replaced by Flavio Cattaneo last year after what sources said were disagreements over strategy with the new top investor.

Asked about rumours that Recchi could be replaced, Cattaneo said on Tuesday he would be happy if he stayed on. (Reporting by Paola Arosio, Stefano Rebaudo and Danilo Masoni in Milan and Mathieu Rosemain in Paris; writing by Agnieszka Flak; editing by Alexander Smith)

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