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Simmering discontent about strategy at Telecom Italia exploded into outright hostility on Wednesday as the group’s dominant shareholder moved to sack Guido Rossi, its chairman.
But the action by Pirelli, the controlling shareholder, was at once contested on Wednesday night by Mediobanca and Generali, other prominent shareholders, who said the tyre group’s decision was in breach of a consultation agreement between them.
Pirelli, which controls Telecom Italia’s board by an 18 per cent stake, published its list of directors for an election at Telecom Italia on April 16. It did not contain Mr Rossi’s name.
Mr Rossi, an Italian lawyer, has been chairman only since September. He took over after the resignation of Marco Tronchetti in a dispute with government about Telecom Italia’s future.
Mr Tronchetti, the Pirelli chairman, is now in the unusual position of attempting to oust his successor.
Towards the end of last year, Mediobanca, a powerful Italian investment bank, and the insurer Generali contributed their shareholdings in TI to an expanded controlling group led by Pirelli.
As part of that move there was an agreement about strategic consultation. Mediobanca and Generali said on Wednesday night the attempt to remove Mr Rossi breached the accord. Pirelli countered that it did not have to consult about the list of directors.
Mr Rossi had on Wednesday attended a meeting at the headquarters of Mediobanca.
The extraordinary clash at TI is the latest outbreak of prominent governance disputes at the heart of the Italian economy. It comes at a crucial time for Italy’s dominant telecommunications company.
Pirelli is negotiating the sale of a majority of its stake to AT&T, the US telecommunications company, and América Móvil of Mexico in a deal that attracts intense political opposition.
It tried to sell to Telefónica of Spain but the deal collapsed because of opposition by Mr Rossi and others at Telecom Italia, people close to the companies said.
Telefónica declined to comment on Wednesday.
People familiar with the situation expected the Spanish company to consider making a counter-offer to Pirelli in coming days, partly on concerns América Móvil and Telecom Italia together could threaten the mobile business Telefónica co-owns in Brazil.
Italian financial institutions are considering their options.
Mr Tronchetti and his allies have grown disenchanted with Mr Rossi’s handling of the company.
There has been a dispute between Mr Rossi and some directors on the board about Telefónica discussions and about the three-year business plan, which left many equity analysts unimpressed.