As was widely anticipated, Telecom Italia Chairman and CEO Franco Bernabe handed in his resignation at the start of a board meeting that had been scheduled to determine the future business strategy of the troubled operator. Current COO Marco Patuano has been appointed to take his place.
Telecom Italia's board announced late on Thursday that it has started the process to find a new chairman and has "temporarily attributed" the executive powers previously held by Franco Bernabe to Patuano, who will now function as managing director and CEO of the company.
In a fairly terse announcement earlier on Thursday, Telecom Italia confirmed that Bernabe had resigned from his office and thanked him for his "great commitment and substantial managerial contribution offered over the years spent guiding the company." Bernabe's six-year tenure ended in acrimony over the direction of the company.
The company did not provide a reason for his resignation. The meeting was chaired by Deputy Chairman Aldo Minucci in place of Bernabe.
Following the meeting on Thursday, one Telecom Italia director said he was confident the current management would be able to relaunch the company. "The company has strong potential," Gaetano Micciche said, according to Reuters. "There is the basis for a relaunch and I am confident the current management is able to do it."
Bernabe had been widely expected to resign at the meeting following a tumultuous period that culminated in the recent plan by Telefónica to strengthen its hold of Telco, which owns 22.4 per cent of the Italian operator.
Bernabe had favoured a capital-raising exercise to as a measure to reduce Telecom Italia's almost €29 billion ($30.5 billion) in debt, and said quick action was required to avoid the company's debt falling into "junk" territory. Moody's Investors Service warned in August that it may cut Telecom Italia's rating to junk, putting pressure on Bernabe to find ways of strengthening the operator's balance sheet.
However, Telefónica is believed to prefer the route of asset sales, with some recent reports suggesting it could potentially seek to break up Telecom Italia's Brazilian business. Meanwhile, Bernabe told a parliamentary hearing last week that a disposal of the Latin American businesses would hurt Telecom Italia's international profile. Analysts say the sale of Brazilian unit TIM Participacoes is now more likely following Bernabe's departure, Reuters reported.
This clash with the operator's key shareholders, including core Italian shareholders Intesa, Generali and Mediobanca, is believed to have firmed Bernabe's resolve to quit, and he leaves behind him a company that is in a worse state than he found it.
"He took over a company with a big debt burden and a declining domestic business and is now leaving a company faced by those same problems," Andres Bolumburu, a Madrid-based analyst at Banco de Sabadell, told Bloomberg in a recent interview. "In all these years, he hasn't found the right strategy to turn around the business."
The new CEO is expected to draw up a new business plan that could include divestments at the Italian operator, Reuters reported.
For more:
- see this FT article (sub. req.)
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article
- see this separate Reuters article
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Article updated with additional information on Telecom Italia's CEO succession.