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MILAN (Reuters) – Telecom Italia (MI:) (TIM) board members will face off this Thursday over plans to reorganise Italy’s largest telecoms group and extract worth from its foremost community property as high investor Vivendi (OTC:) challenges TIM CEO Luigi Gubitosi.

Beneath strain to lift money after two revenue warnings in three months, Gubitosi final month introduced the board proposals to carve out property and appeal to new buyers for components of TIM’s portfolio, together with its key landline grid that provides broadband and fixed-line providers to thousands and thousands of Italian houses and companies.

However the plan from the 60-year previous CEO, who secured a second-term in March, acquired a cool reception from Vivendi — main shareholder within the former telephone monopoly forward of state lender Cassa Depositi e Prestiti (CDP).

Final week it emerged non-public fairness agency KKR is eyeing additional funding in TIM’s fixed-line community on the prospect of some sort of tie-up with smaller wholesale-only fibre-optic rival Open Fiber.

Choices for TIM’s community property will probably be mentioned at a particular board assembly on Nov. 11 as requested by Vivendi representatives Arnaud De Puyfontaine and Frank Cadoret and three different unbiased board members.

WHAT AILS TIM?

TIM has seen income shrink by a fifth over the previous 5 years attributable to aggressive competitors from rivals reminiscent of Iliad, Vodafone (NASDAQ:), Wind Tre and Fastweb on its house market the place it wants to spice up investments to fulfill growing demand for digital providers.

TIM’s 22 billion euro ($25 billion) debt, supported by its community asset, is rated ‘junk’ by the three foremost credit standing companies.

WHO CALLS THE SHOTS AT TIM? Vivendi holds 24% of TIM however doesn’t management its board which has a majority of unbiased administrators. CDP has constructed a stake of virtually 10% in TIM however holds only one seat out of 15.

WHAT DOES CDP WANT? Treasury-owned CDP, which is near changing into Open Fiber’s controlling shareholder with a 60% stake, sees superfast fibre networks as strategic for the nation. It invested in TIM to supervise the group’s community and offset Vivendi’s affect.

Final 12 months it backed a plan sponsored by the earlier authorities to create a single entity combining all TIM’s community entry with Open Fiber.

That plan, which envisaged TIM protecting a majority stake within the new firm whereas giving CDP vetting powers on strategic points, has stalled with key figures in Prime Minister Mario Draghi’s coalition opposing it and query marks hanging over whether or not it could ever get previous regulators in Brussels. WHAT DOES VIVENDI WANT? Vivendi, going through a possible 1.8 billion euro capital loss on its TIM stake at present market costs, needs to have extra of a say in mapping the group’s future and has referred to as into query Gubitosi’s position after backing his reappointment in March. The CEO has been making an attempt to influence Vivendi that giving CDP management in a community tie-up with Open Fiber is the one method to overcome regulatory and political resistance to such a plan.

Vivendi has at all times opposed TIM handing over management of its most-prized asset and desires a direct line with the federal government over strategic choices for the group.WHAT DOES KKR WANT?

KKR final 12 months spent 1.8 billion euros for a stake in TIM’s ‘last-mile’ FiberCop grid linking road cupboards to houses. It not solely needs to guard that funding however is eager to spice up publicity to TIM’s fixed-line property as Italy prepares to spend billions of euros of European Union restoration funds to spice up digital connectivity.

The prospect of an Open Fiber deal regaining traction has set alarm bells ringing and it’s eyeing an additional funding in TIM’s community property to strengthen its hand, sources have stated.

($1 = 0.8655 euros)