TI Telecom Italia S.P.A. New

By Nick Kostov and Manuela Mesco 

BARCELONA--European media group Vivendi SA aims to name three representatives to the board of Telecom Italia SpA, according to a person familiar with the matter, expanding its influence at Italy's former state monopoly.

Vivendi is expected to make the nominations--proposing an expansion of Telecom Italia's board to 6 seats from its current 13--at a shareholders' meeting on Dec. 15, the person said.

Speaking at a conference in Barcelona, Telecom Italia CEO Marco Patuano hinted he would be open to the move.

"Whoever will be a long-term investor, I would prefer to have long-term investors sit on the board than sit on the back seat," he said.

Vivendi, controlled by French businessman Vincent Bolloré, steadily built its stake in Telecom Italia over the summer to become the Italian company's largest shareholder. It currently has no board seats.

The power play at Telecom Italia is part of Mr. Bolloré's effort to reposition Vivendi, which is under pressure from investors to use the EUR8 billion cash pile it has built up through asset sales. The French conglomerate is spreading that treasure chest across an array of sectors, from telecoms to videogame makers.

On Thursday, Mr. Bolloré told a gathering of employees that Vivendi was ready to invest EUR2 billion in a turnaround plan for its struggling French-TV unit Canal Plus, according to two people present at the meeting.

Mr. Bolloré said the investment would be used to win back sports rights, develop the company's presence in film and acquire new talent and technology, the people said.

"We have a huge ambition for Canal Plus and this proves it," Mr. Bolloré, according to one of the people.

Separately, France's stock market regulator disclosed that Vivendi raised its stake in French mobile videogame maker Gameloft to 15.5% from 11.7%.

Canal Plus is struggling with tough competition for sports rights and new competitors like Web TV operator Netflix muscling in on its turf.

On Wednesday, Vivendi's shares fell as much as 11% after it reported disappointing revenue and earnings, warning that the next two years could be a period of "potentially heavy investments."

The results "raised more questions than we liked, particularly on their French pay-TV business Canal Plus and the level of investments needed going forward," analysts at Liberum wrote.

Mr. Bolloré spoke to employees for more than an hour at the Olympia concert hall in Paris Thursday. He explained that the company needed to quicken the pace of its restructuring. Although its subscriber base is stable, Canal Plus is losing subscribers paying EUR40 a month and gaining others paying EUR12 a month, he said.

For Vivendi, a lot is at stake in shaking up Canal Plus. The pay-TV group is currently Vivendi's largest business, accounting for more than half of its revenue and profit.

The shareholder meeting at Telecom Italia was initially called to approve a plan to convert the company's savings shares--which have no voting rights and command a lower price--into ordinary stock, which have voting rights.

The share conversion would provide Telecom Italia with a EUR500 million cash injection while diluting the stakes of current shareholders, including Vivendi.

The conversion plan would also dilute the holdings of one of Mr. Bollore's main rivals: Xavier Niel, founder of French telecom operator Iliad SA, who is also building up a stake in Telecom Italia.

Mr. Niel recently bought options that, if exercised, would give him a 15% stake in Telecom Italia.

Earlier this week, Vivendi's chief executive, Arnaud de Puyfontaine, said the French firm increased its stake in Telecom Italia to offset any dilution from the possible share conversion. The share conversion plan will cut Vivendi's stake to about 14% from its current 20% stake. The French company will still be the largest single shareholder in the Italian firm.

Write to Nick Kostov at Nick.Kostov@wsj.com and Manuela Mesco at manuela.mesco@wsj.com

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(END) Dow Jones Newswires

November 12, 2015 15:18 ET (20:18 GMT)

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