Telecom Italia CEO Franco Bernabè Resigns, Marco Patuano Steps In - Update

(RTTNews) - Telecom Italia S.p.A. (TI, TIAOF.PK) Thursday named Marco Patuano as its chief executive officer, after the exit of Franco Bernabè who had simmering strategy-related differences with key shareholders.

Earlier today, Bernabè announced his exit at a board meeting that mulled ways to avert a severe credit-rating downgrade of the debt-burdened company.

Bernabè has been CEO of Telecom Italia since 2008, having had a short stint earlier in 1998. He has been chairman since 2011.

Meanwhile, Telecom Italia said it has started the process to elect a new chairman and in the meantime, Deputy Chairman Aldo Minucci will preside over the board.

The Board also approved the 6.6 million euros severance package for Bernabè.

The exit of Bernabè follows a reported clash over strategy with key shareholders: Telefonica, Intesa, Generali and Mediobanca who through the investment vehicle, Telco, own a 22.4 percent stake in Telecom Italia.

Telefonica recently said it plans to raise its stake in Telco to 70 percent from 46 percent - something which Bernabè found unpalatable.

Bernabe was also under intense pressure to grapple with a possible junking of Telecom Italia's credit rating, given that the company has about 29 billion euros in debts.

On his part, incoming CEO Patuano is under pressure to chart out a strategic plan that could include divestments that will help cut debts. This will be in sharp contrast to Bernabè who was against divestments and had, instead, sought support for an ambitious 5 billion euros share issue.

In August, the company warned of weaker-than-expected profit owing to intense competition as well as the economic quagmire in Italy.

The company also had a setback, when in July, it ended talks with Hong Kong-based conglomerate Hutchison Whampoa Ltd. (HUWHY.PK, HUWHF.PK) over a possible merger of their mobile operations in Italy.

In Italy, the company's stock closed Thursday at 0.6440 euros, up 0.0105 euros or 1.66%, on a volume of 230 million shares.

On the New York Stock Exchange, the shares closed at $8.66, up $0.05 or 0.58%.