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Guido Rossi, Telecom Italia’s chairman, quit on Friday as it became obvious that efforts by the group’s controlling shareholder to remove him were going to be successful.
Pirelli, the tyre group that controls Telecom Italia’s board, served notice on Wednesday that it wanted to sack Mr Rossi but other prominent shareholders had criticised the move. Nonetheless, it was clear by Friday morning that Pirelli’s opponents were not about to mount a legal challenge to the dismissal.
The resignation comes as Pirelli is trying again to sell all or part of its controlling stake after several previous efforts had stumbled. It is in exclusive negotiations until the end of the month with AT&T of the US and América Móvil of Mexico.
Mr Rossi’s departure is the latest episode in months of upheaval at Italy’s dominant telecoms group. Telecom Italia announced a controversial restructuring plan in September last year which put it in dispute with the government of Romano Prodi over the possible sale of important assets.
Marco Tronchetti Provera, then Telecom Italia chairman, resigned and was replaced by Mr Rossi, a seasoned lawyer and corporate troubleshooter. But Mr Tronchetti is still Pirelli’s chairman and has now managed to sack his successor.
Pirelli owns 80 per cent of a holding company called Olimpia which has just 18 per cent of Telecom Italia shares but controls the telecoms company by nominating the vast majority of its board.
Last Wednesday Olimpia, whose other shareholder is the Benetton family, presented a slate of directors for election at a shareholders’ meeting this month that did not contain Mr Rossi.
Mediobanca and Generali, two influential Italian financial groups, which also own Telecom Italia shares, have a strategy consultation agreement with Pirelli over the telecoms company. They contested Mr Rossi’s removal and said Pirelli’s move had not been agreed with them.
But people close to the groups involved admitted on Friday there was not likely to be a legal challenge. Mediobanca and Generali are annoyed at the way Pirelli has behaved but were not about to defend Mr Rossi further. Mr Rossi had said he was considering resigning before the shareholders’ meeting on April 16.
Pirelli had grown disenchanted with Mr Rossi after the failure of talks to sell part of its stake to Telefónica of Spain. Mr Rossi was viewed by Pirelli as having rebuffed that deal although Mr Rossi and allies say they were not an obstacle.
Mr Rossi has also been heavily critical of the ownership structure of the group, under which Pirelli’s minority stake effectively controls a company with a market capitalisation of over €40bn ($54m).
People at Pirelli have also been critical of what analysts regard as a lacklustre three-year strategy plan presented to investors by Mr Rossi and Telecom Italia executives in March.
The tyre company wants to install as chairman Pasquale Pistorio, the former head of ST-Microelectronics, the Franco-Italian chipmaker. The chairman is chosen by the new board once it has been elected this month. Carlo Buora, the executive vice-chairman, will fill in until then.
Meanwhile, efforts will be renewed next week to find more Italian partners to join in a potential deal with AT&T and América Móvil. The aim is to include enough Italian interest to allay political opposition to foreign entrants in Telecom Italia.
Intesa SanPaolo, the Italian bank, said it was hopeful of finding a solution that would suit all groups.
AT&T stressed it was open to Italian partners and the Benettons seem likely to remain involved.
TI’s shares were at €2.42 in late afternoon trading on Friday, up 13 per cent from last weekend when news emerged of the talks between Pirelli and the two new bidders.