Italian state lender to buy stake in Telecom Italia

Italian state lender CDP is set to buy a stake of up to 5 percent in Telecom Italia, three sources close to the matter said on Thursday, in a move intended to protect the country’s interest in the company.

The decision comes as activist fund Elliott, which has built a potential holding of 5.7 percent in the former phone monopoly, has challenged the way TIM’s biggest shareholder Vivendi manages the group.

The state lender aims to buy the shares to take part in TIM’s next shareholder meeting, scheduled for April 24.

Vivendi and Telecom Italia declined to comment.

CDP’s action also follows a decision by TIM to split off its network, its most prized asset which analysts have valued at up to 15 billion euros, and put it into a new company.

CDP will decide on the purchase at its board meeting on Thursday, one of the three sources said.

Controlled by Italy’s Treasury, the state lender does not currently hold any shares in TIM and intends to buy the shares on the market or in block orders, the source added.

Elliott had called for six Vivendi-nominated board members, including TIM Chairman and Vivendi CEO Arnaud de Puyfontaine, to be replaced through a vote at the meeting. But soon after eight board members, nominated by Vivendi resigned, rattling the activist fund.

On Tuesday, TIM supplemented the shareholder meeting’s agenda with Elliott’s request to appoint six board members to replace the ones that had ceased to hold office.