Telecom Italia Directors Looking to Spoil Telefonica's Influence
Published on: 6th Jan 2014
By: Ian Mansfield
A number of Telecom Italia's independent directors are reportedly preparing a plan to make it harder for Telefonica to force the Italian company into selling its Brazilian subsidiary.
As Telefonica owns its own mobile network in Brazil, and an indirect stake in Telecom Italia's Brazilian subsidiary, the Spanish firm has been instructed to reduce its influence in the Brazilian market.
The most cited rumour is that Telefonica is moving to force Telecom Italia to sell its Brazilian stake, either through a trade sale, or more likely, a break up of the company with its assets being carved up amongst the other Brazilian networks.
Telefonica is in this situation as it owns a majority stake in Telco, a holding company that effectively controls Telecom Italia -- which gives Telefonica an indirect control over the company.
Telco, controlled by Telefonica can nominate 6 directors to the Telecom Italia board, to sit alongside five independent directors.
As a result, several unnamed directors are reported by Bloomberg to be preparing to hinder any Brazilian disposal by forcing any such deal to be considered by an independent committee.
Such a committee would not be controlled by Telefonica's ability to nominate directors to the Telecom Italia board, and while the committee could still recommend a sale of the Brazilian division, it would ensure that such a sale was considered as being primarily a benefit to the Italian firm as opposed to the Spanish one.
The Telecom Italia board is expected to discuss the proposal at its next meeting later this month.
On the web: Bloomberg