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Expert Corporate Governance Service (ECGS)
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Telecom Italia, March 29 2019

In item 6, the largest shareholder Vivendi (23.9% of voting rights) respectively proposes to remove from office 5 non-executive Directors who were nominated by Elliott funds (9.5%) at the General Meeting of 4 May 2018. According to Vivendi, the Directors nominated by Elliott have "repeatedly breached basic and fundamental governance rules and shown a clear lack of independence". In item 7, Vivendi proposes to replace the Directors proposed for removal by 5 new Board members.

Some of the breaches of governance rules complained by Vivendi were confirmed by investigations carried out by the Board of Statutory Auditors. In particular, Directors nominated by Elliott held a separate meeting with Elliott's legal advisors, before the Board meeting called to discuss the removal of the former CEO Mr. Amos Genish.  Despite the concerns over potential information asymmetries within the Board, and the lack of independence of the Directors that attended the separate meetings, we have even more serious concerns over the attempt of Vivendi to reassume control of Telecom Italia's Board. In particular, due to Vivendi's conflicts of interest and bad governance practices carried out as Telecom Italia's largest shareholder: opposition to the elimination of non-voting saving shares, appointment of Vivendi's Chief Value and Efficiency Officer, Mr. Michel Sibony, as head of the Procurement Unit and approval of related party transactions without the necessary procedures. Therefore, we recommend that shareholders oppose the proposals of Vivendi.

Underlying
Telecom Italia

Telecom Italia is a telecommunications group based in Italy. Co. is engaged in the communications sector and, particularly, the fixed and mobile national and international telecommunications sector, the television sector and the office products sector. Co. operates mainly in Europe, South America and the Mediterranean Basin. Co.'s operations are organized along two operating segments: Domestic - Italy (providing telephone and data services on fixed-line and mobile networks for final customers (retail) and other operators (wholesale)); and Brazil (operates in the mobile phone, fixed telephony, in long-distance and data transmission markets in Brazil).

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Proxinvest
Proxinvest

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