Telecom Italia Group is struggling and badly divided.
Luigi Gubitosi, the new CEO at Telecom Italia Group (TIM), faces an uphill task of uniting a divided board of directors during a time of great instability and unprofitability at Italy’s largest telecommunications services provider.
Gubitosi’s predecessor, Amos Genish, was appointed by France’s Vivendi, the top shareholder of TIM. Gubitosi is backed by American activist investor Elliott Management.
Luca Schiavoni, a senior analyst with Assembly Research, a research house that focuses on regulation and policy in the communications market, says the only predictable outcome is that Gubitosi’s tenure will begin with a power struggle.
Elliot has been pushing for the spinoff of TIM’s fixed-line network (NetCo) and merger with Italian broadband firm Open Fiber, owned by state-controlled utility firm Enel and state lender CDP, shifting the focus from the operational turnaround pursued by Genish. Vivendi maintains that if there has to be a network spinoff, it should retain control of that asset.
To muddy the waters further, the Italian government favors a spinoff. Schiavoni says this is not just the current government: Talks of spinning off the network started with the previous government, prompted by a national-security preference to maintain Italian ownership.
While the government had nothing to do with Gubitosi’s appointment, his previous experience as director general of RAI TV positions him to navigate Italian politics. “Being the head of the Italian public broadcaster, Gubitosi had to have good relationships with politicians; so in that respect it is likely that he is able to build bridges,” says Schiavoni. “But it always takes some goodwill on the other side, so a lot will depend on mutual recognition that stakeholders need to rethink their current positions.”
Gubitosi’s impressive career includes stints as country and division manager for corporate and investment banking at Bank of America Merrill Lynch Italy; various roles, including CFO, at Fiat; and CFO followed by CEO at Italian telecoms operator WIND. He knows the telecom industry well.