News
Telecom Italia (TIM)’s CEO Luigi Gubitosi stepped down from the role this weekend, potentially clearing the way for KKR’s takeover of the Italian incumbent
TIM has announced the resignation of Luigi Gubitosi resign as the company’s CEO and general manager, though he retains his position on the board of directors.
Gubitosi, who become CEO in 2018, has had a turbulent time at the company, failing to deliver the financial turnaround that he initially promised and seeing the company lower its guidance until 2023 last month.
Vivendi, TIM’s largest single shareholder, was notably disgruntled by this poor financial showing and began pushing for Gubitosi’s removal.
Last week, however, the situation grew far more complicated, with private equity firm KKR presenting TIM with a mammoth €10.8 billion takeover bid.
With the company mulling over how to proceed, Gubitosi sent a letter to the board on Thursday, ahead of its extraordinary meeting on Friday, saying that he would gladly step down if it expedited the board’s response.
Gubitosi himself already has something of a relationship with KKR, having overseen their investment of €1.8 billion in TIM’s ‘last mile’ fibre network, FiberCop, last year, for which the company received a 37.5% stake.
As a result of this offer, TIM’s board accepted his resignation on Friday, replacing him with head of TIM Brasil, Pietro Labriola, who will take on the role of general manager. The role of CEO appears to remain vacant for now.
But despite Gubitosi standing down, the future of TIM in the wake of the KKR bid remains unclear. The Italian government, which owns around 10% in TIM via state investment bank Cassa Depositi e Prestiti, also has so-called ‘golden powers’ to veto takeover bids by foreign company’s when they relate to critical national infrastructure.
The government has notably said that its decision whether to use these powers or not will depend on KKR’s plans for the network.
In addition, major shareholder Vivendi seems unconvinced by the bid, suggesting that the price offered by KKR is simply too low.
If KKR does succeed in their takeover effort, the future of TIM will likely involve spinning off the company’s fixed line network, a move which has become increasingly commonplace for pass telecoms infrastructure in recent years across Europe and beyond.
In fact, KKR had initially bid for the Netherlands’ KPN earlier in the year for much the same reason, though this offer was ultimately rejected.
Ultimately, it would appear that TIM’s board are still deep in discussion regarding the bid, which, if it goes ahead, would be the largest private equity buy out in European history. With Gubitosi gone, though still on the board, the situation remains no less mired in complexity.
Want to keep up to date with the latest developments in the world of telecoms? Subscriber to receive Total Telecom’s daily newsletter here
Also in the news:
Vodafone combining solar and wind for self-powered mobile masts
Orange CEO Stephane Richard steps down following conviction
UK ISP group takes on the telecom skills shortage
