Elliott Advisors (UK) Limited Statement on Telecom Italia
Elliott notes Vivendi’s statement of September 5th. Elliott shares Vivendi’s concern about the share-price performance of Telecom Italia (“TIM”), a problem that has persisted for years. Yet Elliott is disappointed that Vivendi has chosen to attack TIM’s management, its Board and one of its fellow shareholders rather than work toward constructive solutions.
Vivendi seems to have fallen prey to the “short-termism” it has previously decried. After its own multi-year tenure as acknowledged controlling shareholder, Vivendi appears ready to cast final judgement on TIM’s new Board just four months after it was appointed. How can Vivendi avoid responsibility for the state of affairs at TIM when it was in charge for so long and the new Board has been seated for so little time?
Vivendi also criticizes the “disastrous” management of TIM. While we disagree that management of TIM has been “disastrous,” it is worth noting that TIM’s independent Board has not made any significant management changes at TIM: Vivendi’s Board appointed the current CEO, and both the CEO and CFO remain in their positions.
Among a number of misleading comments in its September 5th statement, Vivendi falsely asserts that Elliott “promised” a doubling of TIM’s share price. Elliott did not and does not make “promises” to the market. It is true that Elliott offered an assessment of the upside potential to the TIM share price over the medium term if a revised, independent board adopted Elliott’s value-creation recommendations. To date, the Board has not adopted any of those recommendations. Instead, the Board has thus far adhered to Vivendi’s own approach. As TIM’s Chairman Fulvio Conti noted on Friday, “We are executing a plan that has been devised and approved by [Vivendi] and actually promoted by [Vivendi].”
In its September 5th statement, Vivendi again confuses the proper role of a shareholder, asserting that Elliott has taken “control” of the board. Elliott does not control TIM’s board. Vivendi’s approach to corporate governance — one of apparent complete disregard for board independence — is among the many reasons TIM’s shareholders overwhelmingly voted for change earlier this year.
Elliott encourages TIM shareholders to give the new Board time to show that they can create value for TIM shareholders in what is obviously a difficult environment for Italian stocks and Telcos in general. Vivendi still has significant representation on TIM’s Board. If Vivendi now takes the view that fresh ideas are needed, Elliott would welcome its help in promoting value-creative solutions at the Board level.
Elliott Management Corporation manages two multi-strategy funds which combined have approximately $35 billion of assets under management. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds of its kind under continuous management. The Elliott funds’ investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, and employees of the firm. Elliott Advisors (UK) Limited is an affiliate of Elliott Management Corporation.
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