After two years of tussle in the board of directors, the Elliott fund begins to let go of Tim. The US investor, who again two weeks ago, in words, reaffirmed his full confidence in the industrial plan presented by CEO Luigi Gubitosi and guaranteed his status as a long-term investor, actually communicated that he had taken a step back, reducing its stake from 9,8% to 6,9% in the capital of the Italian telecommunications company.
Elliott's operation, which had risen to nearly 10% Tim's in March 2016, is largely also linked to the coronavirus emergency, which forces all the big investors to review their strategies and protect themselves, especially in this turbulent phase on the markets (today the Telecom Italia share is flat in the middle of the morning, in a session in which the Ftse Mib tries to insist on recovery after yesterday's exploit).
In theory there would also have been the reason for the probable capital loss to be avoided, given that four years ago Paul Singer's fund paid its first 9,8% of Tim 0,81 euro per share, and later thanks to trading operations lowered the entry price to 0,51 euro. But to avoid this Elliott he had already secured the entire position with a derivative which protects him from further declines and gives him the right to sell shares if the share falls below 0,43 euros (today it is at 0,39).
The main reason remains the strategic one. Elliott's board of directors has not had an easy life in recent years and while reaffirming its support for Gubitosi and his team, the fund is actually deciding to lighten up on Italy also in consideration of the fact that here it has less and less room for maneuver due to the cumbersome role of CDP, which in the meantime has risen to 9,9% of the capital and is destined to act as an "anchor investor".
Also, according to analysts, the greatest value creation on Tim is hanging on what Enel will decide about its 50% of Open Fiber, a variable over which Singer has no power and over which the Cassa led by Fabrizio Palermo has a conflict of interest: he is both a shareholder of Tim and a co-controlling shareholder of the network led by Elisabetta Ripa. The fact is that in two years Elliott has not fulfilled any of the promises he had made to the market when he promoted his list of 10 directors, from which Gubitosi was chosen.
Then the US fund planned to separate the network into a separate company from that of services, sell Sparkle and convert savings into ordinary ones. The latter option remains one of the group's priorities as soon as market conditions arise, while the first two options have faded. Elliott's only promise that has come true is the payment of a symbolic dividend of one cent.
Meanwhile yesterday Telecom convened the shareholders' meeting to approve the balance sheet and coupon next April 23rd. Who knows if given Elliott's disengagement, Vivendi (leading shareholder with 23,9% but in the minority on the board) or the CDP itself, will ask for an addition to the agenda. And who knows what will happen between now and the 2021 shareholders' meeting, when Elliott's board of directors expires.
