TI Telecom Italia S.P.A. New

By Giada Zampano 

MILAN--French media company Vivendi SA secured board representation on Telecom Italia SpA, winning a key battle to gain greater influence over the struggling telecom operator.

In a surprise outcome, almost 53% of Telecom Italia shareholders approved Vivendi's request to increase the number of the company's board members to 17 from 13 and appoint four directors representing the French company.

Meanwhile, Vivendi also blocked a share-conversion plan proposed by Telecom Italia's management that would have heavily diluted its share.

The vote on the board appointments will give Vivendi, which is Telecom Italia's largest shareholder, a stronger say over the strategy of the heavily indebted Italian operator, which has been suffering for years from fierce competition in its domestic market and a continued turnover of major shareholders.

The four Vivendi directors will be Arnaud de Puyfontaine, Vivendi's chief executive; Stéphane Roussel, the company's chief operating officer; Hervé Philippe, its chief financial officer; and Félicité Herzog.

Earlier Tuesday, Mr. de Puyfontaine emphasized that the French media company has a long-term, strategic interest in Telecom Italia--one that deserved board representation.

"We are here for a long-term, industrial investment and not for financial reasons," he said.

Controlled by French industrialist Vincent Bolloré, Vivendi has spent more than EUR3 billion ($3.29 billion) to acquire a 20% stake in Telecom Italia. That investment made it Telecom Italia's largest shareholder but Vivendi had no directors until now.

Earlier Tuesday, Vivendi also managed to block a share-conversion plan that would have diluted Vivendi's 20% stake in the Italian telecom operator to about 13%, while Telecom Italia would have received EUR500 million ($549.8 million) in cash.

In recent days, Vivendi had warned that it would abstain in that vote, requesting more time to study the conditions of the conversion plan. It argued the cash payment for Telecom Italia's savings shares under the plan was insufficient. Telecom Italia's top management had defended the conversion, stressing that its terms were defined with the help of outside advisers.

On Tuesday, the plan didn't receive the two-thirds of the vote it needed to pass. It was approved by only 62.5% of the shareholders who attended the meeting near Milan, while 36%, including Vivendi, abstained and 1.5% voted against the plan.

"That vindicates Vivendi's strategy completely. They got what they wanted," said Bernstein's analyst Claudio Aspesi, commenting on the meeting's outcome. "They're also in a position to try to force the hand over time on governance and strategy."

Vivendi won't change Telecom Italia's strategy much in the short term but could look to sell and distribute its content to the Italian company's customers, a person familiar with the matter said.

On Sunday, Mr. de Puyfontaine said he was "absolutely in favor" of plans to improve Italy's broadband Internet infrastructure being pushed by Italy's Prime Minister Matteo Renzi. He added that he had discussed strategy with Telecom Italia's management but hadn't made any recommendation on a possible sale of the company's Brazilian assets being touted by analysts to raise cash and sell down debt.

Telecom Italia Chairman Giuseppe Recchi didn't rule out that the share-conversion plan could be reconsidered in the future, under different conditions.

"Now that Vivendi is represented on the board, we could discuss again the plan with them," Mr. Recchi told reporters, adding that the newly expanded board will meet on Wednesday.

Nick Kostov contributed to this article.

Write to Giada Zampano at giada.zampano@wsj.com

(END) Dow Jones Newswires

December 15, 2015 14:16 ET (19:16 GMT)

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