Vivendi Becomes Telecom Italia's Largest Shareholder

The French media giant gets ambitious with TIM.

After much speculation from investors, French media company Vivendi has confirmed an increase in its stake in Telecom Italia (TIM) from 8.3 percent to 14.9 percent, solidifying its lead as company’s largest shareholder, replacing Telefonica. The new deal will also guarantee the company two board seats in the Italian telecommunications company.

Vivendi announced on Wednesday it received 1.11 billion shares in exchange for 4.5 percent of the share capital of Telefonica Brasil, corresponding to the sale of Brazilian broadband group GVT to Spanish carrier Telefonica.

Additionally Vivendi upped its ordinary shares from 1.9 percent to 6.66 percent, representing a global deal of $1.2 billion (one billion euros). 

TIM runs 30.1 million lines in Italy, with over 12.3 million retail connections to its fixed network. In South America, where it operates TIM Brasil, the company has 75.7 million customers, making it the second-largest wireless carrier behind Telefonica’s SA local unit.

Analysts predict Vivendi is supporting a potential offloading of TIM Brasil in order to partner with a European rival company. TIM had been controlled by Telecom and three Italian banks, Generali, Mediobanca and Intesa Sanpaolo, since 2007. The recent unraveling of this ownership structure has paved the way for Vivendi to come in stronger and explore stronger vehicles for distributing music, sports and TV programs to Italian consumers through its Canal+ and Universal Music properties.

TIM has suffered crippling debt in recent years, but as the Italian economy recovers, a return to form could mean a big payday for the French media giant and its renewed investments in Southern Europe.