Italy Lender CDP Said to Back Elliott in Telecom Italia Vote

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(Bloomberg) -- Italy’s state lender Cassa Depositi e Prestiti is poised to back Elliott Management Corp.’s board slate for Telecom Italia SpA at Friday’s showdown with Vivendi SA, according to people familiar with the matter.

Cassa Depositi, which is directly controlled by the Italian government, is prepared to vote for Paul Singer’s activist fund because it backs Elliott’s initial proposal for a full separation of the phone company’s landline network and supports the fund’s effort to improve governance, said the people, who asked not to be named since the decision isn’t public.

CDP has built a stake of almost 5 percent in the phone carrier, making its vote crucial in the outcome of the fight between Elliott and Vivendi, Telecom Italia’s biggest investor with 24 percent.

Representatives of CDP and Elliott declined to comment.

The state-owned lender sees Elliott as a vehicle to push Telecom Italia to accelerate a separation of its grid in order to create an independent operator able to boost investment in the fiber network, the people said.

Economic Development Minister Carlo Calenda in April criticized Vivendi’s stewardship at the Italian phone company. "Vivendi has been a very bad shareholder for Telecom Italia," he said in an interview with daily la Repubblica. Italy needs a single and strong network able to attract investments, Calenda said. "We are supporting a project which wants to create a public company," he wrote on Twitter last month.

CDP’s purchase of a stake in Telecom Italia already has sparked criticism that a state-owned firm shouldn’t intervene in deciding the fate of a private company.

To read Bloomberg Opinion on the government intervention click here: Rome Falls (Again) for Industrial Policy

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