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Telecom Italia ruling plays into Rome's hand in Vivendi row

Reuters  |  PARIS/MILAN 

By Gwenaëlle Barzic, Stefano Rebaudo and Stephen Jewkes

PARIS/MILAN (Reuters) - An Italian ruling that has de facto control of Telecom Italia has strengthened Rome's hand as it considers using special powers that could trigger asset sales.

Billionaire Vincent Bollore's Vivendi, which owns 24 percent of Telecom Italia (TIM) and controls two-thirds of its board, denies it controls the former monopoly.

Vivendi's influence in Italy came under close political and regulatory scrutiny after it became No. 2 shareholder in Italy's biggest private broadcaster with a 29 percent stake.

Italy's government is looking into whether breached an obligation to notify it of its effective control of TIM, which is considered a strategic national asset.

If de facto control of TIM is shown, the government may conclude it can exercise so-called "golden powers", ranging from a fine to possibly demanding key assets be sold.

Market Consob ruled on Wednesday that the French group did exercise de facto control over TIM and a source close to the matter said on Thursday this played into Rome's hands.

"If there's no control there's no way the government can use golden powers against Vivendi," the source said.

is about to notify on its position in TIM but will reiterate it exercises only "management and coordination", a French source said.

Any acknowledgement of de facto control could force the French group to consolidate TIM's net debt pile of around 25 billion euros ($30 billion).

French markets AMF said on Thursday it had asked to provide a detailed analysis to explain why it does not believe it controls Telecom Italia.

ASSET SALES

A forced sale of TIM's assets would be politically and commercially sensitive.

Politicians have been calling on and off since 2006 for TIM's prized backbone telecom network to be transferred to a state-controlled entity to create a neutral platform.

Meanwhile, TIM faces an assault on its core business from state-controlled utility Enel which is rolling out a fast internet network.

Service provider Sparkle is seen as a particularly sensitive asset because of its submarine network which connects to countries in Europe, the Mediterranean and the Americas.

A French source close to the matter said on Thursday that selling TIM's backbone network was not on the agenda, but added there were several options for Sparkle.

"It could be sold or it could become a separate entity within TIM under the leadership of an Italian leader," the source said.

PARIS MIS-MATCH

Rome, currently caught up in a row with Paris over a deal to take control of France's STX shipyards, is expected to decide later this month on whether it should have been notified.

The French source said if a deal is reached between Italy and France over STX it would ease pressure on over TIM and some analysts have said is likely to name an Italian as TIM's CEO to appease

Separately, Italy's communications regulator AGCOM has called on to cut its holding in either or TIM to below 10 percent arguing having both breached Italian rules meant to prevent concentration of power.

Vivendi, which has appealed the ruling, has told AGCOM it will take a series of measures to meet the watchdog's concern, including transferring a stake of at least 19.19 percent of shares to a trust.

($1 = 0.8415 euros)

(Additional reporting by Mathieu Rosemain in Paris and Alberto Sisto in Rome; Editing by Toby Chopra and Alexander Smith)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, September 14 2017. 20:20 IST
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