Telecom Italia chief to quit as Olivetti secures victory

FRANCO BERNABE will this week resign as chief executive of Telecom Italia to make way for Roberto Coloninno, Olivetti's boss. On Saturday Olivetti successfully concluded its hostile pounds 40bn bid for the phone giant.

"I confirm that I will propose myself as chief executive, but it will then be up to a shareholders' and board meeting," Mr Coloninno said in Milan.

Mr Bernabe's resignation is due on Tuesday at the latest when Telecom Italia's board meets. Mr Bernabe is due to meet Mr Coloninno on Monday.

"There's been a lot of drama since we launched the bid," said a source close to Olivetti. "But we've kept to our plan. We'll go on keeping to our plan."

Mr Coloninno has vowed to make Telecom Italia, privatised in 1997, a more aggressive player in the $500bn-a-year European telecommunications market. This market is growing rapidly and generating high share prices as telecoms, computing and media technologies converge.

Olivetti is expected to strip down Telecom Italia's multi-layered management and bring in senior industry executives from outside, a source said.

Olivetti's takeover is likely to have ripple effects on European business. Deutsche Telekom, which unsuccessfully put itself forward as white knight for the Italian phone giant, now looks weak beyond German borders. BT and new entrants to the industry like MCI WorldCom look strong by comparison.

Meanwhile, UK mobile phone company Vodafone now faces stiffer competition from German rival Mannesmann. To gain Brussels approval for the takeover, Olivetti agreed to spin off its Italian mobile phone assets to Mannesmann.

Less clear is what will happen to Telecom Italia's share price when the Milan market opens. Virtually all of its core Italian investors responded to Olivetti's tender. But many UK and US institutions, which hold around 30 per cent of Telecom Italia, held on to their shares. "We'll wait and see what the market does," said a spokesman for Standard Life Investments.

Olivetti ended up with 51.02 per cent of Telecom Italia's shares on Saturday. "This was just about perfect," said an observer. "Coloninno gains control, but he has to raise the minimum amount of debt to do that."

Olivetti will draw down portions of the $7.5bn (pounds 4.7bn) blocks made available to it by Chase Manhattan, Lehman Brothers and Donaldson, Lufkin & Jenrette, as well as the $1bn made available by lead Italian adviser Mediobanca. It has secured this debt against Telecom Italia's future cash flow.

"I don't think you'll see Olivetti bothering with buying more shares any time soon," said an adviser. "They don't need them. Further purchases would only add to the debt."

Fallout from the takeover could hit other sectors. Olivetti has smashed a gentleman's agreement on the Continent against hostile bids, paving the way for others in industries from telecoms to financial services.


Olivetti's victory in the battle for Telecom Italia also marks a stunning reversal for some of the world's top corporate financiers at the hands of less exalted rivals, writes Dan Gledhill.

Telecom Italia was advised by the cream of the investment banking world, notably Credit Suisse First Boston, Lazards and JP Morgan. An even bigger loser could be Goldman Sachs, which was advising TI's other suitor, Deutsche Telekom. Goldman was rumoured to be on a win-only bonus of $100m (pounds 62m).

On Olivetti's side, the outcome will be a bonanza for Chase Manhattan, Lehman Brothers, Mediobanca and Donaldson, Lufkin & Jenrette, which are expected to have an equal share of total fees up to pounds 400m.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn