The chairman of Telecom Italia, Guido Rossi, resigned on Friday after clashing with the company's largest shareholder, capping a week that began with AT&T and America Movil offering to buy control of Telecom, the biggest Italian telecommunications company.
The announcement, made on Friday by Telecom Italia in a one-sentence statement, brought an end to Rossi's seven-month stint at the helm of the struggling phone company.
Rossi, a former chairman of the stock market regulator who helped write Italy's antitrust law, is considered a specialist at turning around troubled companies and was appointed in September to help Telecom Italia find an effective strategy to reduce debt while confronting increasing competition in its home market.
PHOTO: AFP
His resignation was not entirely unexpected, because earlier in the week Olimpia, a holding company through which Pirelli Group controls 18 percent of Telecom Italia, omitted Rossi from a list of proposed directors to be voted on at a shareholders' meeting April 16. The chairman will be picked from among that list.
Rossi and the chairman of Pirelli, Marco Tronchetti Provera, have been feuding since last month, when the two openly disagreed on strategy. Rossi wanted to sharply reduce Telecom Italia's dividend, which normally equals about 90 percent of profit, so that more money would be available to pay debt and invest in new technology.
Tronchetti Provera -- who himself resigned as Telecom Italia chairman in September after arguing with the government over strategy -- has insisted on the high dividend payments so that Olimpia can service its debt load.
AT&T and America Movil, based in Mexico and the largest cell-phone company in Latin America, offered to buy two-thirds of Olimpia for 4.5 billion euros (US$6 billion) in a deal that Pirelli has already accepted.
Tronchetti Provera has announced that he wants to sell Olimpia's stake in Telecom Italia, which he bought in 2001 and which has steadily dropped in value since then.
The price AT&T and America Movil are prepared to pay values Telecom Italia at well above the company's market price.
Several Italian politicians have criticized Pirelli's plan to sell most of Olimpia to the two North American companies, and the chief executive of one of Italy's largest banks made a thinly veiled call for a group of domestic companies to band together to buy control of Telecom Italia.
The Italian media have identified Pasquale Pistorio, former chief executive of the French-Italian chip maker STMicroelectronics, as the likely next chairman of Telecom Italia. Pistorio is on the list submitted by Olimpia.
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