(Bloomberg) -- Telecom Italia SpA will name General Manager Pietro Labriola its new chief executive officer as the ex-phone monopolist seeks to revive its fortunes through an unprecedented asset spinoff plan and counter a 10.8 billion-euro ($12.2 billion) takeover bid by U.S.-based KKR & Co., people familiar with the matter said.
The carrier’s board elevated Labriola to the top role at a meeting on Friday with the backing of its two largest investors, French media conglomerate Vivendi SE and Italian state lender Cassa Depositi e Prestiti SpA, the people said, asking not to be named since the appointment hasn’t been made public yet.
A spokesman for Telecom Italia declined to comment. Bloomberg News reported last month that Telecom Italia planned to name Labriola as its next CEO.
The backing of the state lender, known as CDP, for Labriola and his new business plan could make it harder for KKR to succeed with its bid, which is still pending, the people said.
New York-based KKR in December said that its approach was “of a friendly nature,” signaling a reluctance to proceed without a green light from the Italian government and from the Telecom Italia board. Vivendi has dug in its heels against the bid, saying it doesn’t adequately reflect Telecom Italia’s value.
Wrench in Plans
The political situation in Italy could also throw a wrench into KKR’s plans, with the country set to kick off the secretive voting process to select a new president on Monday. While there are no official candidates, current Prime Minister Mario Draghi, who has signaled he’s not opposed to the U.S. private equity group’s bid, is widely seen as the top contender.
But uncertainty linked to the voting process and the possibility of instability if Draghi is no longer premier have dampened enthusiasm for corporate deals in the country, affecting the KKR bid as well, people familiar with the matter said.
For his part, Labriola is championing a plan to spin off the carrier’s landline network into a new unit called NetCo that will focus on wholesale services, with the goal of gaining a solid revenue stream from regulated tariffs, people familiar with the matter said earlier this week.
A significant portion of Telecom Italia’s 30 billion euros in debt may be transferred to this new company as could thousands of workers, the people said, and the plan could also see all of the company’s commercial services spun off into a separate unit called ServiceCo.
Labriola’s new plan would effectively revive a project to merge Telecom Italia with smaller, state-backed rival Open Fiber SpA and build a single national network to avoid billions of euros in duplicate investments, people familiar with the matter told Bloomberg on Thursday.
The 54-year-old Labriola, who’s also CEO of the carrier’s Brazilian unit TIM SA, was appointed general manager in November after former CEO Luigi Gubitosi quit. A telecommunications veteran, Labriola has been at Telecom Italia for about two decades. As head of the company’s landline services for enterprises, he was involved in one of the company’s first attempts to spin off its grid in 2013. He is also known as the creator of one of Italy’s first ADSL-based mass market services, known as Alice.
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