Telecom Italia CEO briefs investors, shares slide again

© Reuters. FILE PHOTO: Telecom Italia (TIM) General Manager Pietro Labriola poses for a portrait next to the company’s name at TIM headquarters in Rome, Italy, January 17, 2022. REUTERS/Guglielmo Mangiapane/

By Elvira Pollina

MILAN (Reuters) -Shares in Telecom Italia (MI:TLIT) (TIM) hit record lows on Monday as the head of Italy’s biggest phone group met investors to try to persuade them of the merits of his plans to revive the former phone monopoly.

The TIM roadshow comes ahead of a decision expected shortly from TIM on a 10.8 billion euro ($11.7 billion) takeover proposal which U.S. fund KKR made in November.

A board meeting to draw up a response to the KKR proposal could be held next weekend once TIM’s advisers complete their analysis to compare TIM’s planned in-house revamp with KKR’s plan, two sources said.

TIM shares, which lost around 30% of their value in the last two sessions of last week, had another torrid day, ending down 5.5% at 0.236 euros after earlier touching fresh record lows of 0.22 euros.

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Rollercoster ride for Telecom Italia shares as CEO woos investors https://tmsnrt.rs/3Kbf7RO

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Volumes today were more than six time the 30-day average, with nearly 5% of voting capital changing hands.

The shares remain way below the 0.505 euro level at which the KKR approach was pitched.

Backed by Telecom Italia’s leading investor Vivendi (PA:VIV), which billed KKR’s proposal as too low, CEO Pietro Labriola’s plan is centred around the structural separation of TIM’s fixed network business from its retail operations.

Last week Labriola said that KKR’s plan for TIM was similar but added he was convinced doing it internally could generate more value for investors, including minority shareholders.

However, a third source said some of Telecom Italia’s board of directors have reservations about ditching KKR’s proposal without exploring talks with the fund.

DON’T PANIC

Labriola was holding face-to-face meetings with investors in Milan and would also give a series of teleconference briefings between now and Wednesday, the sources said.

The sources said Labriola had met with representatives from BlackRock (NYSE:BLK), the world’s largest asset manager and a main shareholder in TIM. Foreign institutional investors own 41.3% of the group.

In a video message to the group’s 42,500 domestic staff over the weekend, Labriola, a veteran TIM executive who in January became TIM’s fifth CEO in six years, urged them not to panic.

Labriola called on TIM’s employees to focus on serving customers and take pride in TIM’s role as Italy’s main telecoms operator.

His message went down badly with unions who labelled his plan destructive and vowed to oppose it.

Hit by stiff competition in its core domestic market as well as regulatory constraints, debt-laden TIM reported a record loss last year and said it expected a low-teens decrease in its 2022 core profit, based on the current group structure..

($1 = 0.9208 euros)