Activist Elliott Asks Telecom Italia Shareholders for Patience

(Bloomberg) -- Elliott Management Corp. is asking Telecom Italia SpA’s other shareholders for something not typically associated with a pushy activist: patience.

In a statement published Monday, Elliott said the board of Telecom Italia, which the New York-based fund installed four months ago, should be given more time to follow through on its turnaround plan.

While acknowledging that the stock performance has been a disappointment, Elliott said the board hasn’t yet been able to unleash its potential, partly because of pressure on Italian stocks and telecom companies generally. The former phone monopoly, whose largest shareholder is Vivendi SA, is following a strategy previously set by Vivendi and being led by executives appointed by the French media conglomerate, according to the statement.

Shareholders should give the new board “time to show that they can create value” for Telecom Italia’s owners “in what is obviously a difficult environment for Italian stocks and Telcos in general,” Elliott said.

Chief Executive Officer Amos Genish has spent almost a year trying to right the ailing carrier, which has not paid a dividend on its ordinary shares since 2013. His job is on the line with board members representing Elliott frustrated by what they see as a lack of progress by Genish, people familiar with the matter said this month. The stock has lost about a third of its market value during Genish’s tenure.

Telecom Italia shares rose as much as 4.4 percent on Monday and traded up 3.8 percent at 55 cents as of 10:44 a.m. in Milan.

When it wrested control from Vivendi in May, Elliott got behind Genish’s efforts to legally separate Telecom Italia’s landline network, boost free cash flow, cut debt and improve service quality. Genish has since pushed back against the fund’s demands that he sell a stake in Telecom Italia’s towers business and spin off its phone network.

Vivendi last week said it’s “deeply concerned by the disastrous management” of the former monopoly since Elliott seized board control, spurring Elliott to strike back on Monday.

“Vivendi seems to have fallen prey to the ‘short-termism’ it has previously decried,” Elliott said. “How can Vivendi avoid responsibility for the state of affairs at Telecom Italia when it was in charge for so long and the new board has been seated for so little time?”

“Vivendi’s Board appointed the current CEO, and both the CEO and CFO remain in their positions,” Elliott said.

To contact the reporter on this story: Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Kim Robert McLaughlin

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