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 The world's biggest money manager said on Monday it had a voting
stake of 7.8 percent in Italy's biggest telecoms group, which is
trying to end years of sluggish growth and cut 28 billion euros ($38
billion) in debt.
Telefonica believes the key to survival is selling Telecom Italia's
Brazilian business — valued at over $11 billion — to lighten debts
that remain heavy despite the sale of assets in Argentina and the
issue of convertible bonds.
Such a sale would also benefit Telefonica by allowing it to retain
sway over its own Brazilian mobile phone unit Vivo. It has been told
by Brazil's competition watchdog that without the sale it must seek
a new partner for Vivo.
But businessman Marco Fossati, an investor with a 5 percent stake in
Telecom Italia, says selling TIM Participacoes, known as TIM Brasil,
would damage Telecom Italia's business.
He and small shareholder group ASATI have forced a shareholder
meeting on Friday to vote to dismiss the company board and appoint a
new one. Fossati's Findim Group submitted on Monday its slate of
five candidates to take over as directors.
One source with knowledge of discussions between the shareholders
said BlackRock had seemed initially to be against plans to remove
the board but in the last few days there had been talk they could
support it.
"On the surface the BlackRock move could be anything or nothing at
all. They have so many funds," the person said, referring to the
complexity of the giant financial firm's holdings.
Italian market regulator Consob is trying to ascertain whether
BlackRock acted on its own in upping its stake, or in agreement with
other parties, including Telefonica, a source close to the matter
said.
Consob has also threatened to fine BlackRock for not disclosing the
increase of its stake, which came to light in newspaper reports of
an SEC filing at the weekend.
BlackRock, which previously held around 5 percent of the phone
group, said it had made no agreements over the Telecom Italia shares
that required disclosure under Italian rules. It said it had
registered shares for the meeting, but did not disclose its voting
plans.
The world's biggest money manager said late on Monday it had amended
a filing to U.S. watchdog SEC made on December 10 to show its
holding in Telecom Italia as of November 29 had been 9.97 percent
and not 10.14 percent.
BlackRock said the incorrect filing had been an "inadvertent
overstatement", adding it would be informing the market about its
latest holdings as of Monday within the next 48 hours, as requested
by Consob.
Adding to the uncertainty, the two Telefonica representatives on
Telecom Italia's board quit on Friday without providing an
explanation. Sources close to the matter said the move was aimed at
blunting criticism from Cade, the Brazilian competition watchdog,
that Telefonica had too much influence over Telecom Italia.
Fossati's group says the board is still tilted in favor of large
shareholders.
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CRACKS
Telecom Italia's board is led by CEO Marco Patuano and controlled by
Telco, the investment vehicle owned by Telefonica and its Italian
partners Generali, Intesa Sanpaolo and Mediobanca, which owns 22.4
percent of the Italian phone firm.
Telefonica recently tightened its grip on Telecom Italia by signing
a deal to gradually take over Telco, which is expected to meet on
Thursday to prepare its strategy ahead of the event.
Industry sources said they expected shareholders with a combined
stake of up to 54 percent to attend the shareholder meeting. A lower
turnout would benefit Telco.
Fossati's campaign gained traction last week when proxy advisers ISS
and Glass Lewis unexpectedly backed their proposal.
But a third source, who had spoken with investors at BlackRock, said
it favored the sale of TIM on the grounds that it would create value
for shareholders.
Shares in Telecom Italia ended up 5.1 percent after hitting a
three-day high of 0.6985 euros in afternoon trading.
"The block (of key shareholders) seems to be cracking and this gives
the stock takeover appeal," said Roberto Lottici, fund manager at
Ifigest.
"However it is hard to understand whether this is the right time to
buy. I for one don't hold any shares and am waiting, because
visibility is very low. It's not at all clear now what is going to
happen."
($1 = 0.7283 euros)
(Additional reporting by Stephen Jewkes
and Valentina Za; editing by Sophie Walker and Tom Pfeiffer)
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