TIM CEO keeps his job but faces board room challenges

The Italian incumbent's shareholders voted on a number of issues on Tuesday, including its full-year accounts and the composition of its new board.

The latter wasn't as straightforward as it might have been. TIM itself submitted a slate of possible board candidates, including Labriola as CEO and a new chairperson in the form of M&A lawyer Alberta Figari, early last month; outgoing chair Salvatore Rossi had already indicated his intention to step down.

Within weeks, minority shareholders had put forward a further three slates for consideration, the most noteworthy being a list of potential candidates from Merlyn Partners, which included a change of CEO. The firm, which holds just 0.53% of TIM but could well have the backing of perennially disgruntled shareholder Vivendi, proposed ousting Labriola and putting former TIM executive Stefano Siragusa into the CEO office.

Siragusa worked with Merlyn on the alternative strategic plan it sketched out for TIM in October last year, a plan centred on the retention of the telco's network assets and sale of its Consumer and Brazil businesses.

The fact that Labriola's job was under threat meant that there was also some – more – doubt over the NetCo sale plan; the €18.8 billion sale of NetCo to investment firm KKR is ongoing, the firms having notified the European Commission last week.

But the TIM slate secured just under half of the shareholder votes and as such six of the nine directors who will make up the new board come from that list, including Labriola himself and Figari.

However, the Merlyn slate did garner some support – 2.38% of the votes, to be precise – and so will provide two directors, one of whom being Siragusa, while the ninth board member is one suggested by Bluebell Capital Partners.

Naturally we can't yet know how much Siragusa will seek to influence TIM's strategic direction from here onwards, but it's a fairly safe bet that his presence on the new board is not a source of great joy for Labriola, who has faced fierce criticism over the past couple of years due to his plan to rebuild TIM without its network assets and, more recently, the three-year strategic plan he outlined in March, which included an admission that debt will increase following the NetCo sale.

With his mandate now renewed, Labriola can push on with his plans. His first job seems to be to throw shareholders a bone though.

"Over the next three years we will work to ensure sustainable growth for the Group in the interests of all our stakeholders and with the aim of capitalising on our strengths. We will pay close attention to costs and above all to achieving a return to value generation in the Italian market," Labriola said, in a statement circulated to the press.

"With these priorities we aim once more, and possibly within the plan period, to provide a remuneration to our shareholders, who with the outcome of today's Meeting have given us the confidence to move ahead and ensure sustained growth in the value of our shares as a result of our work to deliver tangible results over the medium term," he said.

TIM has been unwilling to predict when it will re-start paying a dividend, the implication being that it will not come in the short term. "Possibly" within the next three years is probably the best shareholders can hope for.

They would probably also quite like Labriola to deliver on his vision for TIM's future. The CEO is doubtless happy to have the backing of shareholders, but will be under no illusions: the next three years will not be easy.