Vivendi tries a bit of stand-up comedy with lame TIM denial

With the Edinburgh Fringe festival just around the corner, Vivendi is showing off its comedic skills by trying to convince regulators it doesn’t have ‘de facto control’ control over TIM.

Each year following the Scottish comedy extravaganza three awards are given. One for the best act, one known as the panel prize and the final is for the best newcomer. With its latest statement, Vivendi seems to be eying the final prize as it reacts to French regulator Consob, after it asked the group to clarify whether or not it controls the operator. Of course, Vivendi’s intentions here are purely innocent.

“Vivendi confirms that it considers that it does not exercise any de facto control over Telecom Italia under Article 93 of the Consolidated Law on Finance and Article 2359 of the Italian Civil Code given that its participation in Telecom Italia is not sufficient enough to allow it to exercise, on a stable basis, a dominant influence at Telecom Italia shareholders’ meetings,” the statement reads.

“Regarding the existence of a position of control pursuant to international accounting principles for consolidated financial statements, Vivendi confirmed in its last financial report (Q1 2017 released on May 11, 2017) that it does not “have the power to govern Telecom Italia’s financial and operating policies, according to IFRS 10”. The French and Italian markets will be duly informed should Vivendi come to a different conclusion, which is not expected at this stage, in connection with Vivendi’s consolidated financial statements to be published for the first half of 2017.”

From a legal and governance perspective, Vivendi is right. It is exercising control which is deemed appropriate. And it has had the green light from the European Commission over the current position. This might surprise some considering the boresome bureaucrats tendencies to meddle in competition matters throughout the single market, but hey, it’s okay with the situation so that’s probably good enough for most.

But let’s look at some of the facts:

Considering the company only owns 24.9% of shares, this is a large amount of influence over TIM strategies, as well as the management team who is supposed to oversee them. Former CEO Flavio Cattaneo apparently didn’t agree with this strategy and was quickly binned. We’re not quite sure how Vivendi can keep a straight face when making such statements.

It is a slightly suspect position, but why would it change? It has been given the green light by the European Commission, who are usually quite sensitive with these sorts of things, and Vivendi can seemingly exercise influence without having to buy the company. Look at it from de Puyfontaine’s perspective, the current set up is saving him a couple of billion euros.