UPDATE: Telecom Italia Names Senior Management Team
Published on: 26th November 2007
(Adds Mediobanca's confirmation, share reaction, background)
MILAN -(Dow Jones)- Franco Bernabe has been designated as Telecom Italia's new chief executive, and Gabriele Galateri as new chairman, ending months of uncertainty over the company's management, Italy's merchant bank Mediobanca said Monday.
The designations follow a meeting of the nominations committee of Mediobanca, one of the new Italian shareholders that bought control of Italy's largest telecoms operator with Spain's giant Telefonica last May.
Bernabe, 59, is currently vice-chairman of Rothschild Europe. Independent board member of oil giant Petrochina, he was CEO of ENI from 1992 to 1998. He has already headed Telecom Italia for a few months at the end of 1998, before the company was taken over by a group of Italian investors headed by entrepreneur Roberto Colaninno.
Chairman of Italian merchant bank Mediobanca until last June, Galateri, 60 years old, has headed Italian carmaker Fiat and Italian holding companies Ifil and Ifi.
"We believe the decision regarding management should provide greater clarity and direction for Telecom Italia and could be a positive catalyst for the stock," UBS said in a recent report, when it resumed coverage of the stock at buy.
Credit Suisse First Boston noted, however, that "uncertainty over dividend and network separation may remain for a while." It restarted Telecom Italia's coverage with a neutral rating.
Analysts said the managerial changes were not a surprise for the market. Telecom Italia's share showed little response. By 1000 GMT they were trading up 0.9% at EUR2.18, outperforming a slightly positive overall market.
The choice of new managers came after Italy's government and telecoms regulator AGCOM called for new shareholders to name a new management team at Telecom Italia as soon as possible, so that investments and business strategy can be planned.
"Crucially, Telecom Italia needs its management to push forward with a multi-billion network rollout plan to put in place the network for future high-speed broadband services," said Emeka Obiodu, telecoms analyst at Global Insight in a recent research note. In May, Spain's Telefonica teamed up with a group of Italian financial heavyweights to seal a EUR4.16 billion deal and buy control of Telecom Italia through a new investment vehicle named Telco. Telefonica's Italian partners include banks Intesa Sanpaolo and Mediobanca, insurer Generali and the Benetton family.
Under the agreement, the Spanish company is paying EUR2.3 billion for a 9.9% indirect stake in its Italian counterpart, which is suffering from a heavy debt load and a prolonged lack of strategy after a series of management reshuffles.
Telecom Italia plans to invest EUR6.5 billion over the next decade to upgrade the network to handle high-speed services through broadband.
But if it is forced to share that network with competitors, then its revenue could suffer and its already-large debt burden would probably grow.
-By Giada Zampano, Dow Jones Newswires, 39 02 58 21 9907; firstname.lastname@example.org
(Alessandro Mocenni, with MF-Dow Jones, and Sabrina Cohen contributed to this report)
(END) Dow Jones Newswires