Telecom Italia shareholders elect new board

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MILAN, Italy -- Hundreds of Telecom Italia shareholders gathered Monday to elect a new board amid uncertainty as the company's biggest shareholder tries to negotiate the sale of its controlling stake to U.S. telecom company AT&T Inc. and its Mexican partner, America Movil SA.

Chairman Guido Rossi quit his post earlier this month after just seven months on the job when support was withdrawn by the main shareholder, the holding company Olimpia, which owned by the Pirelli tire company and Benetton apparel maker. Rossi had taken over after Marco Tronchetti Provera, who also is chairman of Pirelli tires, resigned in a dispute with the government over the former monopoly's future.

Telecom Italia's acting chairman, Carlo Buora, told investors the company is "structurally healthy" and able to cope with the disruption caused by the recent change of management. He said the group has invested an average of 5 billion euros ($6.7 billion) a year since 2002, or an average of 17% of revenue -- more than its European peers.

In all, more than 900 shareholders representing 36.24% of Telecom Italia's capital were to vote on a new board. Over 350 shareholders were present at the meeting -- more than four times last year's attendance.

Unions concerned about job security protested outside, and threatened a strike next month.

Olimpia is negotiating to sell two-thirds of its stake to AT&T and its Mexican affiliate -- with the possibility of the sale of the final third after a year. The talks remain exclusive until the end of the month.

The negotiations have raised concerns in Rome about a strategic national asset falling into the hands of foreigners, and the media have been full of speculation about arrangements that would allow the company to remain in Italian hands.

Fueling the speculation, the chief executive of Intesa Sanpaolo SPA, Italy's largest bank, said it may consider taking a stake.

"We might consider a shareholding participation if this looks like a good idea for us and our shareholders," Intesa Sanpaolo's Corrado Passera said during an analyst presentation, noting that the bank has in the past made temporary investments.

Under the Telecom Italia statutes, Olimpia nominates four-fifths of the board, while minority shareholders nominate the remaining fifth. Olimpia controls Telecom Italia with just an 18% stake -- a quota that falls below the level at which a shareholder must launch a full takeover.

While Rossi's name was excluded from Olimpia's list of 17 names, the names of the current chief executive, Riccardo Ruggiero, and Deputy Chairman Carlo Buora were included.

Italian media have reported that Olimpia will seek to name as chairman Pasquale Pistorio, the former head of the SGS Group, the only Italian microelectronics company. Pistorio's name
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