HomeNewsTIM appoints Pietro Labriola as its new CEO

    TIM appoints Pietro Labriola as its new CEO


    Day 1: Vivendi wants a word, KKR is in reception and there’s a looming election

    Telecom Italia has finally appointed General Manager Pietro Labriola as its new CEO, according to Reuters.

    Labriola is a TIM stalwart who has run TIM’s Brazilian operations for the last three years. He was promoted to general manager in November when former CEO Luigi Gubitosi stepped after a run of profit warnings. There are two immediate challenges: to manage the takeover bid by US private equity firm KKR and to upgrade the network of the debt-ridden former monopoly. TIM needs to boost its backbone if it is to meet Italy’s digital plans to boost broadband speeds for millions of households and businesses.

    Vivendi got its man

    Labriola’s nomination was promoted by the group’s largest investor, French media giant Vivendi. The appointment was unanimously approved by the board on Friday, say witnesses.

    Vivendi, which holds 24 per cent of TIM, and has criticised KKR’s €10.8 billion low offer, which it says massive undervalues Italy’s biggest telecoms operator – and halves the net worth of its own shares. Labriola must devise a business plan to revamp the group that would serve as a benchmark for the company’s board to weigh against KKR’s proposal.

    Proposal to split the company 

    In a preliminary presentation to the board of directors, Labriola drafted proposals to split the company’s fixed network operations from its services businesses. The NetCo comprising TIM’s infrastructure assets would focus on its wholesale-only business. It would include submarine cable unit Sparkle, while assuming a significant portion of the company’s debt and staff, Reuter’s sources say.

    That could help revive a stalled plan to merge TIM’s fixed network assets with those of fibre optic rival Open Fiber, a project CDP earlier this month urged TIM to revive to avoid a costly duplication of investments.

    The rise of CDP 

    CDP, which owns 60 per cent of Open Fiber would likely emerge as a major stakeholder in any combined network venture with TIM.Vivendi could then focus on TIM’s retail service businesses, which include video content platform TimVision, one of the sources said. Vivendi had always opposed the idea of TIM handing over control of its prized network infrastructure, but it reversed its position in December. 

    KKR is already a big stakeholder

    KKR’s takeover proposal is conditional on backing by TIM’s board and the Italian government, which makes the group’s network infrastructure a strategic asset and it has special powers to block unwanted interest.

    KKR already holds 37.5 per cent of TIM’s last-mile grid and plans to carve out the fixed assets and give CDP a leading role in overseeing them, the sources said. The situation is complicated another variable: by reliance on the government, which could have some say on how to address TIM’s situation. Italy’s government could change in next week’s presidential election.