Telecom Italia CEO Genish Ousted Over Clash With Elliott
Telecom Italia CEO Genish Ousted Over Clash With Elliott
(Bloomberg) -- Telecom Italia SpA Chief Executive Officer Amos Genish has been removed following a strategy clash with investor Elliott Management Corp., ending months of speculation about his future and setting up another face off between the fund and top shareholder Vivendi SA.
Genish, a 58-year-old former Vivendi SA executive, was at odds with Elliott over his plan to split off the carrier’s landline network, said people familiar with the matter, who asked not to be identified because the talks were private.
The ouster followed a hastily-arranged conference call by the board of Italy’s biggest phone carrier early Tuesday. The directors backed by Elliott -- 10 of a total of 15 -- voted against Genish, the people said. The CEO was in South Korea at the time signing 5G contracts with Samsung Electronics Co.
The exit means Telecom Italia will be looking for its fifth CEO in the past five years. The tenure of Genish, who was installed by Telecom Italia’s largest shareholder Vivendi in September 2017, has been in question since Elliott won control of the board from Vivendi in May. Now it’s up to Vivendi to decide whether to call for an election on a new board slate, to try to topple Elliott.
The CEO’s mandate was revoked effective immediately, Telecom Italia said in a statement, confirming the earlier report by Bloomberg. Chairman Fulvio Conti will take over as CEO on an interim basis and the board will meet on Nov. 18 to decide on a replacement, the company said.
Genish and Vivendi wanted the carrier to keep control of Telecom Italia’s landline grid, while Elliott, the second-biggest investor, is seeking to spin off more than 51 percent of the business.
“It was a very cynical move and deliberately planned in secrecy, to create maximum destabilization,” Vivendi said in a statement, criticizing that the decision was taken while Genish was in Asia on business. “We decry the destabilization of this decision and the disgraceful method.”
Elliott said the fund supports the board’s decision to remove Genish, in an emailed statement.
“Genish had the opportunity to create value; we supported him. In actuality, he did precisely nothing and instead proved to be an impediment to value creation,” Elliott said. Shares of the company fell 34 percent under his tenure.
Telecom Italia shares fell 0.8 percent to 53 euro cents as of 12:12 p.m. in Milan. Telecom Italia’s 1.25 billion euros of bonds due October 2027 dropped 1.5 cents on the euro to 87.1 cents, the lowest level since they were issued a year ago.
Mixed Signals
Billionaire Paul Singer’s fund had sent mixed signals about Genish. The fund initially called for a separate listing or partial sale of the carrier’s fixed grid, a step toward creating a single national network. After taking board control, it said it would back his strategy, which included legally separating the fixed grid but keeping full ownership.
In the background, however, it was clear Elliott wanted the Israeli former army captain to be more radical in fixing the company, which is staggering under net debt of 25 billion euros ($28 billion) and heavy pension liabilities and has not paid a dividend on its ordinary shares since 2013.
The tension burst into the open in June when Genish criticized unidentified directors for feeding “untrue and unreliable speculation.” The board called him in to explain his comments and he apologized. In September, people familiar with the matter said directors representing Elliott have grown impatient over his handling of the company.
Genish’s Successor
A few seasoned Italian executives have been mooted as possible replacements to Genish. Messaggero reported that Conti was considering board member Alfredo Altavilla and Italian veteran executive Rocco Sabelli as possible successors. People close to the company have also mentioned Altavilla as a potential candidate along with another Telecom Italia board member, Luigi Gubitosi.
- Gubitosi, 57, is a special administrator of Italy’s bankrupt flag carrier Alitalia SpA and a former Merrill Lynch & Co. senior banker who has led Wind Telecomunicazioni SpA and state-owned television network RAI.
- Altavilla, 55, was a close aide to Fiat Chrysler Automobiles NV’s late Chief Executive Officer Sergio Marchionne. He was seen as one of the leading candidates for the top job at Fiat but lost out to Jeep chief Mike Manley and quit in July.
--With assistance from Dan Liefgreen and Jerrold Colten.
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
©2018 Bloomberg L.P.