Flavio Cattaneo turned around the Italian incumbent’s performance but got on the wrong side of top shareholder Vivendi.

As expected, Telecom Italia late on Monday announced that it will part ways with CEO Flavio Cattaneo, agreeing to pay him €25 million on departure.

His exit would appear to have nothing to do with the performance of Telecom Italia – also known as TIM – and everything to do with his handling of a rural fibre dispute with the government and the damage it inflicted on his relationship with top shareholder Vivendi.

TIM’s press department certainly seems sad to see Cattaneo go, giving him a glowing review when announcing his leaving.

The telco said Cattaneo had completed a "major and extraordinary turnaround of the business," with quarterly financial reports that were positive on every metric.

Under Cattaneo, TIM had grown its customers and revenues to "levels not reached in the last 10 years," the company continued.

"It is universally recognised that such a recovery has never before been seen, making it the first among the major European telecommunications companies that were formerly incumbent in Europe and the U.S., in terms of speed of growth of all main topline drivers, and of profitability, as well achieving the greatest coverage in fibre."

Indeed, when Cattaneo took over from Marco Patuano in late March 2016, he joined a stagnant and heavily-indebted operator.

TIM offered Cattaneo a hefty €40 million bonus to turn the company round, and while that move attracted strong criticism from some quarters, it appears to have paid off, despite his brief tenure.

TIM raised its full year EBITDA outlook after Cattaneo’s first quarter at the helm.

The following quarter, TIM’s revenue and EBITDA came in ahead of expectations.

TIM said that in 2016, its domestic operation turned in its best annual performance since 2007.

In the first quarter of 2017, TIM’s group revenue surged 8.54% year-on-year, while EBITDA jumped 16.24%.

However, just as Patuano before him, Cattaneo’s fatal mistake was to seemingly fall out with Vivendi, which owns 23.94% of TIM, making it the company’s biggest single shareholder.

The cause of this falling out was Cattaneo’s dispute with the Italian government over TIM’s rural fibre deployment.

The government had launched tenders aimed to subsidise rollouts in unprofitable, so-called ‘white’ areas of the country, which were identified via a consultation in which TIM participated.

TIM signed up to the first of three tenders, but then withdrew, opting instead to invest in its own networks. This change of course angered the government, because its tenders are supposed to pay for networks in parts of the country where there is no competing infrastructure. It subsequently launched an antitrust probe to ascertain whether TIM abused its dominant position.

It also put Cattaneo on a collision course with Vivendi, which reportedly urged him to soften his approach to dealing with the government.

Vivendi is currently having a dispute of its own with the government over its stakes in both TIM and Italian broadcaster Mediaset – in which it holds 28.8% – and allegedly wants to avoid further antagonising the government.

Under Italy’s media plurality law, no single company is allowed to wield significant influence over both a telco and a media company. Telco regulator AGCOM has ordered Vivendi to reduce its holding in either TIM or Mediaset; Vivendi has appealed the ruling.

According to local press reports, the final straw seems to have been Cattaneo’s opposition to Vivendi’s alleged plan to appoint Amos Genish as managing director to work alongside him.

Genish joined Vivendi in January as its chief convergence officer. Before that he was CEO of Telefonica Brasil.

TIM did not name a successor to Cattaneo; however, reports over the weekend claimed that his responsibilities will be split between Genish; Vivendi CEO and TIM chairman Arnaud de Puyfontaine; and deputy TIM chairman Giuseppe Recchi.

For leaving early, Cattaneo will not receive the full €40 million special award he was offered on his arrival. Instead, he will receive €22.9 million of that sum, plus a further €2.1 million provided he does not join a direct competitor to TIM in Italy or Brazil, or solicit offers from them.