Vivendi to appeal after court rejects TIM network sale case

Vivendi says it will appeal the decision, published by the court on Tuesday, more than a year after the case was filed and some seven months after TIM closed the network sale in question.

The court ruled against it on a technicality, but Vivendi believes its case still has legs.

"In a decision issued today, the court considered this request inadmissible due to a lack of standing (notably because Vivendi would not have declared its voting intention in the event of a Shareholders' meeting being convened), and did not address the merits of the case," Vivendi said.

Vivendi still insists that TIM did not handle the networks sale correctly...something you could also argue was a technicality that enabled Vivendi to sue in the first place. Vivendi's insistence on proper procedure being followed is entirely motivated by its staunch opposition to the very idea of a networks business sale, particular at the price that NetCo, as the assets are known, ultimately attracted.

"Despite the dismissal of its request on purely formal grounds by the Milan court, Vivendi continues to believe that the sale of TIM's network should have been subject to a vote at a Shareholders Meeting as it is an essential asset of the company which would change the corporate purpose of TIM," Vivendi said.

It is unclear exactly what Vivendi hopes to achieve by pursuing its case, but doubtless Italy's lawyers are more than happy to see it continue with the fight.

We also cannot be sure whether Vivendi will still be TIM's biggest shareholder when this legal battle does ultimately draw to a close one way or another.

Late last year the Italian press and the international newswires circulated myriad reports of investor interest in the French company's 24% stake in TIM.

CVC Capital Partners was the latest to be linked with Vivendi's TIM stake, as per a Bloomberg report, setting tongues a-wagging over the prospect of any deal serving as a platform for the investor to launch a full takeover of the Italian incumbent at some stage in the future. Meanwhile, the newspapers also linked Bain Capital and Apax Partners with the Vivendi stake.

There has been nothing of any substance on that score in the past few weeks, apart from some serious trading volumes at TIM towards the end of the year, but it's clear that Vivendi pulling out of the telco remains a distinct possibility.

Price is clearly going to be an issue. TIM is trading at around the €0.26 mark, but as Morningstar indicated in December, Vivendi could be looking for up to €1 per share for its stake, a figure that would still leave it with a significantly smaller return than the sum it originally invested in TIM. While analysts believe it would struggle to convince a buyer to part with €1 per share, it is doubtless still looking for a major premium on the telco's stock price.

Whatever the truth of the matter, it's difficult to see how a protracted legal battle on the NetCo issue will help Vivendi's cause.