Ahead of the Telecom Italia AGM scheduled for tomorrow the company and its largest shareholder – Vivendi – have been adopting increasingly antagonistic public positions.

It has been known for some time that Vivendi reckons it should have a bunch of its own people on the Telecom Italia board, in recognition of the fact that it owns 20% of the shares, a request that seems to have been greeted with something less than enthusiasm by the current TI board. Furthermore proxy advisors to TI’s institutional investors have apparently recommended it be rejected.

In late November TI announced an addition to the AGM agenda to propose the mandatory conversion of ‘savings shares’ into ordinary shares. If this motion were passed it would significantly dilute Vivendi’s proportion of shares to 13% and thus weaken its position on the matter of board representation.

Vivendi doesn’t seem too keen on this plan, however, and plans to abstain from that vote, which will make it unlikely to go through and presumably result in a bit of a boardroom stand-off. In a statement released over the weekend it detailed why.

Firstly Vivendi doesn’t agree with the mechanism of the conversion, which involves saving share owners paying a supplement of 9.5 euro cents, and thinks the supplement is too low. It also questions the inherent fairness of unilaterally diluting the stake of ordinary shareholders. And lastly Vivendi thinks a decision such as this should be taken by a board that properly represents current shareholders – i.e. one with four Vivendi representatives.

TI followed up with a release of its own, acknowledging Vivendi’s concerns. It started by stressing it has the interests of the company at heart and that the share conversion has the support of a couple of independent advisors – Citi and EQUITA – whose standing is said to be beyond dispute. It also insists that analysts are keen on the move, as evidenced by recent movements in the TI share price, and that TI has done everything by the book.

The resulting impression is of a company attempting to resist a hostile takeover, but struggling to do so. Vivendi made some valid points that were not really addressed by TI at all. It now seems likely that both proposals will be rejected tomorrow and we’ll be back to square one. If Vivendi were to proceed with a full takeover bid things would be clearer, but what is presumably making the rest of TI nervous is what Vivendi would do if it did get the board membership it desires.