Telecom Italia (TI) has named Marco Patuano as interim CEO following Franco Bernabe’s resignation, paving the way for the development of a new strategy.
After a long board meeting yesterday, during which Bernabe tendered his resignation, the Italian…
Telecom Italia (TI) has named Marco Patuano as interim CEO following Franco Bernabe’s resignation, paving the way for the development of a new strategy.
After a long board meeting yesterday, during which Bernabe tendered his resignation, the Italian incumbent announced that CEO powers have been “tentatively” transferred to COO Patuano.
Meanwhile, vice president Aldo Minucci, who is also temporarily acting as chairman, has begun the search process for a new chief.
TI has not given a reason for Bernabe’s departure and the former executive chairman declined to comment on the situation to reporters as he left the board meeting. However, rumours of his resignation began mounting in late September, when Telefonica agreed a deal with other investors in Telco, which owns 22.4% of TI, to increase its stake in the holding company.
Bernabe, who headed the company for six years, is said to have been at odds with Telco over strategy. He had reportedly advocated a capital increase of up to €5bn to avoid a credit downgrade to junk status, saying this would raise cash more quickly than asset disposals. It has been speculated that the Spanish telco might opt for asset sales instead.
But, in another twist, Italian Prime Minister Enrico Letta has signed a decree giving the government special powers over assets deemed of strategic importance to the country, including TI’s fixed-line network, Reuters reported citing an unnamed government source.
Questions remain over how the new CEO will tackle TI’s hefty debt pile, which stood at €28.8bn (US$38.8bn) as of 30 June.
Ratings agency Fitch said in a release that Bernabe’s departure signals TI will not go ahead with a capital increase, something it contends would have had a positive impact on the telco’s credit profile. Fitch noted that potential sales of Brazilian unit TIM Brazil and the domestic fixed-line network could strengthen the business and help cut debt. However, as the sales would take at least six to 12 months to complete, they would be unlikely to help TI’s credit rating in the short-term.
MB Securities analyst Fabio Pavan said he believes that selling Brazilian subsidiary TIM Brasil remains the quickest and easiest way to cut debt. He noted that TIM is likely to command about €8bn – about 30% of the telco’s expected debt at year-end.
In Pavan’s view, TI’s strategic direction should become clearer once the new head is found. The three most commonly-named by local reports are: Massimo Sarmi, CEO of Poste Italiane and a former leading manager with TIM; Francesco Caio, Italy’s Digital Agenda Champion and a former CEO of Cable & Wireless; and Vito Gamberale, CEO of Italian infrastructure fund F2i.
Meanwhile Oreste Pollicino, a professor at Boccono University which Patuano once attended, noted that Bernabe’s efforts to seize upon TI’s “huge potential” cannot be deemed successful while acknowledging that the former chief cannot be held responsible for all the telco’s problems.
Pollicino said Patuano’s first challenge will be to improve TI’s annual turnover and his second to transform it into a leader in innovation.
