Pirelli chief quits as Italian drama continues

Carlo Buora, the chief of Italian tyre company Pirelli resigned from all roles in the group late on Monday to focus on the ongoing controversy at Telecom Italia.

A statement from the tyre giant said Buora had quit his roles as Pirelli’s managing director and general manager “to concentrate on his commitment in Telecom Italia, where he has served in the role of executive vice chairman from September 15 with the responsibilities formerly attributed to Marco Tronchetti Provera”.

Provera quit as the dramatic row between the leading operator and the Italian government over the splitting of the operator’s fixed and mobile units reached breaking point.

Pirelli remains Telecom Italia’s largest shareholder after paying out Eur1.17bn (£788m) last month to increase in interest in Italian holding firm Olimpia by around 10 per cent.

Pirelli now controls an 80 per cent stake in Olimpia, with the remaining 20 per cent held by Benetton.

But Pirelli has since come under pressure to consolidate Olimpia’s debt into its own balance sheet – a condition which analysts believe may dramatically influence a decision to sell off mobile unit TIM.

Speaking with telecoms.com recently, Gartner analyst, Monica Basso conjectures that Pirelli cannot allow this to happen and suggests the company would need to get rid of the debt as soon as possible. In other words sell off TIM to protect Pirelli.

Pirelli will reports its third quarter results late on Tuesday. Meanwhile, Telecom Italia said that its consolidated net profit beat analyst expectations in the third quarter of 2006 reaching Eur880m, an increase of 3.5 per cent compared with the same period a year earlier.

Revenues in the third quarter amounted to Eur7.77bn, an increase of 4.6 per cent compared with the same period in 2005.

The operator also said that it has received an unsolicited acquisition proposal, mandating senior management to negotiate the possible sale of the group’s mobile activities in Brazil.

The sale “would ensure Telecom Italia the financial flexibility needed to pursue its already announced industrial policies and, in particular, the opportunity to develop in the European market and to realize the new generation network at the domestic level,” the company said.