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European competition commissioner keen to maintain customer choice and sustainable pricing in Italian telecoms market

European antitrust authorities are watching Vivendi’s actions at TIM with a view to safeguarding competition in the Italian telecoms market, it emerged at the weekend.

"Naturally we are following the situation very closely," Italian news agency ANSA quoted European competition commissioner Margrethe Vestager as saying on the sidelines of the Ambrosetti Forum in Cernobbio.

Vestager was referring to the current controversy in Italy surrounding Vivendi’s role as controlling shareholder of Telecom Italia, which now goes by the TIM moniker. The government is investigating whether the French firm controls TIM, and if so, whether it should have informed the state of a change in ownership at the telco.

"The important thing for us is competition in the Italian market," Vestager said, highlighting the importance of choice for Italian consumers and sustainable prices for both operators and customers.

"What we look at when we make this kind of appraisal is who exercises control [and] if it is a de facto merger even if it does not seem so, because this is about how competition in the market works," she said.

Vivendi has repeatedly denied exercising control over TIM, despite being the the telco’s largest shareholder, with a 24% stake, and having replaced CEO Flavio Cattaneo with its own chief executive Arnaud de Puyfontaine just over a month ago.

In its first half results announcement late last week Vivendi again made that same assertion, but indicated that it intends to push on with plans to bring together the activities of the two businesses.

"Vivendi confirmed that it considers that it does not exercise any de facto control of Telecom Italia," adding that its "interest in Telecom Italia is not sufficient to allow it to exercise, on a stable basis, a dominant influence at Telecom Italia shareholders’ meetings."

It also said it does not at present have the power to govern TIM’s financial and operating policies, according to accounting standard IFRS 10.

However, "Vivendi, as the largest shareholder of the Italian operator, intends to promote a long-term strategy of developing the convergence between telecommunications and content," the company said.

Vivendi posted revenues of €5.44 billion in the first half of 2017, up 7.8% year-on-year, buoyed by the strength of its Universal Music business, which reported 15.2% growth and accounted for 49% of turnover.

Sizeable growth at Universal Music also boosted earnings, but was unable to offset weaknesses elsewhere in the business. Vivendi’s group EBITDA fell by 9.2% to €352 million.

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