Telecom Italia CEO Briefs Investors, Shares Slide Again

Shares in Telecom Italia (TIM) hit record lows on Monday as the head of Italy's biggest phone group met investors to try to persuade them of the merits of his plans to revive the former phone monopoly.

The TIM roadshow comes ahead of a decision expected shortly on a 10.8 billion euro ($11.7 billion) takeover proposal made by U.S. fund KKR in November.

A board meeting to draw up a response to the KKR proposal could be held next weekend once TIM's advisers complete their analysis to compare TIM's planned in-house revamp with KKR's plan, said two sources close to the matter.

Ahead of their assessment this week, TIM's advisers have asked the U.S. fund to clarify whether the terms of its November offer still stand, the sources added.

TIM shares, which lost about 30% of their value in the final two sessions of last week, had another torrid day on Monday. The shares ended down 5.5% at 0.236 euros after touching a record low of 0.22 euros.

Volumes today were more than six time the 30-day average, with nearly 5% of voting capital changing hands.

The shares remain way below the 0.505 euro level at which the KKR approach was pitched.

Backed by TIM's leading investor Vivendi, which billed KKR's proposal as too low, CEO Pietro Labriola's plan is centred around the structural separation of TIM's fixed-network business from its retail operations.

Last week Labriola said that KKR's plan for TIM was similar but that he was convinced doing it internally could generate more value for investors, including minority shareholders.

However, a third source said that some members of TIM's board of directors have reservations about ditching KKR's proposal without further talks with the fund.

Labriola was holding face-to-face meetings with investors in Milan and will also give a series of teleconference briefings between now and Wednesday, the sources said.

VIDEO MESSAGE

The sources said that Labriola had met representatives from BlackRock, the world's largest asset manager and a main shareholder in TIM. Foreign institutional investors own 41.3% of the group.

Labriola, a veteran TIM executive who in January became TIM's fifth CEO in six years, sought to reassure employees about the future of the company in a video message to the group's 42,500 domestic staff over the weekend.

Labriola urged them not to panic and to focus on serving customers and take pride in TIM's role as Italy's main telecoms operator.

"Many of you are worried; I am too, but make sure you distinguish between a healthy concern and panic," he said in the video.

The message went down badly with unions, which labelled his plan destructive and vowed to oppose it.

Hit by stiff competition in its core domestic market as well as regulatory constraints, debt-laden TIM reported a record 8.7 billion euro loss for 2021 and said it expected a low-teens decrease in its 2022 core profit, based on the current group structure..

($1 = 0.9208 euro)