MILAN: Telecom Italia’s (TIM) top investor Vivendi is ready to challenge in court any decision by the Italian group’s board to sell its landline grid unless shareholders back the sale by a qualified majority, two sources say.

The move piles pressure on TIM’s directors who are due to meet on Nov 3 and Nov 5 to consider a multi-billion-euro binding bid for the network filed by US fund KKR with the backing of prime minister Giorgia Meloni’s government.

Vivendi informed TIM’s board of its stance in a letter addressed to the company’s directors, the sources said.

The French media group has gathered five legal opinions saying the sale of the grid – the phone group’s most valuable asset – would change TIM’s corporate purpose, and therefore, require an extraordinary shareholder vote, the sources said.

In its letter, Vivendi said TIM’s directors would be legally responsible of any board decision to sell the grid without such a vote, the people added.

TIM’s management, on the other hand, believes the shareholders can be consulted over the network sale in an ordinary assembly, a separate source said.

The management reasons that TIM would continue to be a mobile network operator also involved in fixed-line activities, so the nature of its business would not change, meaning no qualified majority vote is required.

TIM’s directors are also facing pressure from the group’s chief executive Pietro Labriola and Italy’s government to give at least a preliminary go-ahead to KKR’s offer by early November, other sources have told Reuters.

The Treasury aims to take a 15% to 20% stake in the network, for a maximum of 2.2bil euros (US$2.33bil).

The sale of TIM’s fixed-line network is a key plank of Labriola’s strategy to revamp the debt-laden group.

However, Vivendi is opposing the plan as the company is demanding a higher valuation of the asset.

Sources have previously said KKR values the network at around 23bil euros when including debt and a potential future payment linked to combining TIM’s fixed-line assets with those of state-backed rival Open Fiber.

The French group quit TIM’s board in January after a round of fruitless negotiations with the government over the future of the Italian company.

With its 24% voting stake, Vivendi would have a de facto veto power at any TIM extraordinary shareholder meeting. —Reuters