It's Telecom Italia day and it's the debut of Flavio Cattaneo, in his new role as CEO, who gets straight to the point: "The group has the potential to aspire to better results", he says addressing the shareholders who have arrived in large numbers number in Rozzano, just outside Milan. The shareholders instructed me, he explains immediately afterwards, "to carry out a rapid change of pace and to operate a marked managerial discontinuity". It won't just be a question of cutting costs since "my managerial approach has always been characterized not only by attention to cost containment, but also by the search for stable growth conditions and the creation of value for companies", the manager reminds 60,48% of ordinary capital arrived on site to approve the financial statements (72 million losses in 2015) and management incentives. Arnaud de Puyfontaine, CEO of Vivendi, is present, who is the first shareholder with his 24,68% of the capital with voting rights, followed by JP Morgan Chase with 2,14% (as well as the 2,69% without voting rights), People Bank of China 2,07% and Blackrock 4,78%.
TITLE ON THE RISE
Cattaneo's words set in motion the purchases on the Stock Exchange and Telecom shares are in the spotlight on Piazza Affari, with increases of even more than 3%. The dispute with Enel over Metroweb, on which the Cdp is expected to pronounce in the afternoon, gives investors a glimpse of the possibility of earnings, reassured by the attitude of the new CEO who continues with the analysis: "the group needs a turn around in Italy and in Brazil, where the situation is more complex, than a profound restructuring”.
Cattaneo recalled that in recent years "the numbers continue to outline a trajectory of reduced revenues and corporate weakening". The Italian telecommunications industry, in fact, in the last seven years has structurally lost a third of its value, ie 10 billion, "as a result of fierce intra-industry competition, in some cases meaningless". In practice, if the telecommunications sector in 2006 was worth around 30 billion in terms of customer expenditure, in ten years it has dropped to 20 billion. “In other sectors – remarked Cattaneo – much less would have been enough for disruptive changes”. A scenario that “requires a rapid evolution of our business model based on cost efficiency and a return to growth. Transformation is needed and needs to be implemented quickly."
COST CUTTING AND BONUS TO MANAGERS
The goal of reducing costs by 1,6 billion by 2018 “is a challenging target but – believe me – within the company's reach. I am deeply convinced that the containment of operating expenses is an ethical duty for every manager, to be pursued, however, without accepting compromises on quality, innovation and commercial performance”, assures Cattaneo.
But the observations of several shareholders focused precisely on the issue of costs, who judged the 55 million incentive reserved for the CEO and a small team of managers indicated by him as "excessive". The bonus is expected to be collected in a single solution in 2020 upon achievement of targets on costs, debt and Ebitda which will be pursued by 2019. In the end, however, the shareholders' meeting approved all the items on the agenda: the 2015 financial statements, the distribution of the preferred dividend of 2,75 euro cents to savings shares, the "Special award" incentive policy, the reduction to 16 board members, the new name "Tim spa".
ULTRA-BROADBAND AND FIBER
It is the topic of the moment, while the battle with Enel rages on over the optical fiber plan. "The ultrabroadband strategy represents an essential condition for the return to growth", explains Cattaneo, who indicates three guidelines for the new Telecom strategy: "a faster roll out of the FTTH plan, the combined use of copper and fiber technologies of our architectural alternatives with the aim of reaching customers in the most efficient way and the anticipation of 4G coverage and signal quality objectives to maintain a leadership position in the mobile market”.
IF ENEL ENTERS THE FIELD, WEAPONS EQUAL
"The entry of companies from other network sectors into the telecommunications market is certainly a positive factor" adds the president Giuseppe Recchi who, however, sets a condition: "In order for competition to bring the desired benefits, it is essential that the subjects present on the market can compete on equal terms. In addition to guaranteeing fair and non-discriminatory access to the infrastructures of other subjects, it would also be necessary to review the obligations currently incumbent on Telecom alone.
THE SUPPORT OF VIVENDI
The endorsement and approval of the first shareholder Vivendi arrives. "As reference shareholder, Vivendi reaffirms its willingness to support Telecom Italia in its development, particularly in broadband and so that it plays a leading role in the global telecommunications market", stated Arnaud de Puyfontaine at the meeting. "It's time to re-invent Telecom and give it the necessary means to be a strong operator," he underlined, also in his role as vice-president of Telecom Italia. “Transforming a society requires courage and energy, but we have it. The management and all the interested parties can count on our support and our determination to accompany them in this ambitious repositioning project", added the manager, expressing his "confidence in the group" also due to the presence of a competent top management team. De Puyfontaine also specified that he voted in favor of the executive remuneration package "as it is aligned with the projects" of the shareholders. Vivendi – concluded the CEO of the French group – “will be an active and vigilant shareholder to ensure that Telecom generates growth and value in the long term”.
EDISON ALSO COMES INTO PLAY
If Enel enters the fiber, Telecom enters the energy supply. Not far from Rozzano, in the Foro Buonaparte in Milan, Marc Benayoun, Edison's new CEO, presented Edison's new offer for electricity, and confirmed that negotiations are underway with the Tlc group: “The idea is to promote our offers with their network”. “There's a discussion with Telecom, it's an operation to use a very powerful marketing channel. – He added – It is however necessary to find an agreement on the commercial and financial aspect. It is not the first time that there have been commercial agreements with other networks in the energy sector. It is an interesting discussion for both parties but there is still no agreement”.
FIBER CHALLENGE IN PERUGIA
Enel today presented the launch of fiber connections in Perugia (80.000 properties connected in FTTH by 2017), linked to the plan to replace the new digital meters. And just this morning Telecom Italia announced that in Perugia, thanks to the cabling of 200 buildings, Frit will start with the first thousand super-fast connections, up to a Giga. Also in Milan, concluded Cattaneo, connections for 600 families are in sight starting from June. The challenge continues.
