Telecom Italia CEO Luigi Gubitosi has resigned from his post, as the Italian telecom operator mulls a proposal from U.S.-based investment firm Kohlberg Kravis Roberts & Co (KKR) to take the company private.
TIM has a domestic fixed line and mobile business in Italy, as well as operations in Brazil.
TIM’s board of director’s accepted the exit on November 26, relieving Gubitosi of his chief executive and general manager duties. The board appointed Pietro Labriola, CEO of subsidiary TIM S.A. (TIM Brasil), as general manager for the time being for continued operations. Gubitosi, who took the helm in 2018, is still a member of the board of directors.
TIM Chairman Salvatore Rossi has taken over responsibility for remaining aspects including, partnerships and alliances, institutional communications, sustainability projects and sponsorship, public affairs, and management of TIM’s assets and activities for Italy’s national defense and security systems.
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Earlier in the week TIM acknowledged a non-binding approach by KKR, made November 19, to delist the public company for a cash price valued at about EUR 10.8 billion ($12 billion). The so-called “Indication of Interest” by KKR was categorized as “friendly” with the aim of securing approval from TIM’s board and support by management. In addition to the board, it would need approval from Italy’s government.
In announcing Gubitosi’s resignation, TIM also said it formed an ad hoc committee led by Rossi and four independent directors, with support of advisors, to start up preliminary activities in preparation to review KKR’s interest.
As for Gubitosi, Reuters reported last week that the now former chief executive had told TIM’s board he was willing to step down to help accelerate a decision on KKR. Gubitosi has reportedly been facing heat from TIM’s largest single shareholder French media company Vivendi, which questioned his role and strategy amid poor financial results.
In the third quarter TIM saw revenue declines of 2.1% year over year and recorded net profit of EUR 200 million. The company’s net debt stood at EUR 22.2 billion.
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In his letter to the board last week, detailed by Reuters, Gubitosi said it was time to take steps regarding KKR and added that access to TIM’s books to conduct due diligence could technically be ready within 48-72 hours.
“Time-wasting attitudes by the board that could be interpreted as aimed at defending the interests of certain shareholders are to be avoided,” Gubitosi said in the letter.
KKR isn’t a stranger to TIM investments. KKR Infrastructure previously acquired 37.5% of FiberCorp (which includes TIM’s last-mile network) for EUR 1.8 billion.
TIM is the largest telephony operator in Italy and holder of telecommunications infrastructure. The mobile operator launched initial 5G service in the country using 3.7 GHz spectrum and gear from Ericsson.
In acknowledging KKR’s interest in TIM, Italy’s economy and finance ministry called it “positive news for the country.”
The government said it would carefully evaluate as it follows developments, particularly with regard to infrastructure-related projects to ensure compatibility with Italy’s plans for expanding ultra-fast broadband connections.