The custody battle for TIM between Vivendi and Elliott gets personal

Vivendi says a recent TIM auditors report shows dodgy behaviour from Elliott, which in turn reckons Vivendi is a negative influence on the company.

Every new phase of the battle for control of Italian operator group TIM (the artist formerly known as Telecom Italia) is increasingly taking on the characteristics of an acrimonious custody fight. Each party takes turns in publishing claims of what a bad parent the other is, while at the same time insisting that it only wants what’s best for tiny TIM.

The latest salvo from Vivendi is a press release responding to a recently-published statutory auditors report (only in Italian, as far as we can tell). The release is headlined: ‘The irregularities in governance at Telecom Italia revealed by the Statutory Auditors report reinforce Vivendi’s position to request a return to a more balanced Board of Directors,’ which is consistent with pretty much all of Vivendi’s public statements on the matter since it lost control of the TIM board to Elliott last year.

“Vivendi is extremely concerned by the outcome of the Telecom Italia Statutory Auditors report released today confirming the existence of serious irregularities related to the governance of the company and its Board of Directors of which a majority of members are from the Elliott list,” opens the body copy. “This report reveals that the Chairman of the TIM Board violated corporate laws as well as the most basic, fundamental governance rules.”

It goes on to note the apparent existence of a ‘shadow board of directors’ consisting of just the Elliott-nominated ones, and says the auditor’s report reveals evidence that privileged information had been leaked to third parties prior to a previous board meeting. It doesn’t say who may have leaked that information but obviously Vivendi thinks it was someone affiliated to Elliott. All this goes to show how important it is that the shareholders get rid of some Elliott-nominated board members at a meeting on 29 March, according to Vivendi.

Elliott doesn’t seem to have directly addressed the Vivendi press release in public, but did publish one of its own this morning, merely entitled ‘Elliott statement on Telecom Italia’. Aside from dead-naming the company, the point of the release is to address the shareholder meeting and implore them not to replace any Elliott-nominated board members with fresh Vivendi ones.

Elliott believes Vivendi’s nominees are unsupportable, lack true independence, and would simply return control to a group with demonstrable conflicts of interest, related party transactions and a history of undermining TIM shareholders,” said the Elliott release.

“Elliott believes it is time to give TIM and its independent Board stability and space to implement its strategy, to achieve much-needed reform and to deliver sustainable shareholder value. It is time for TIM to shake off the damaging management of the past and reaffirm its decision to move confidently into the future. It is time for TIM, in the words of its new CEO, to become a “normal company.”

To support its position Elliott has published a presentation that can be accessed through a special website called time-for-tim.com (do you see what they did there?). The 40-page (yes, 40) presentation provides an exhaustive list of reasons why Elliott is great and Vivendi is rubbish, a lot of which amounts to an attack on French conglomerate Bolloré Group, which is the dominant shareholder at Vivendi, and which Elliott apparently suspects of nefarious motives.

We have seen nothing to make us pick one side over the other in this dispute. They both seem to want control of TIM to further their own ambitions, whether it’s short-term profit-taking or as a small part of a broader long-term strategy. Both are somewhat disingenuously claiming to only have the best interests of TIM at heart, but if we had a vote at the shareholder meeting and it were an option we’d be tempted to get rid of both of them. TIM declined to comment when contacted.