DT awaits its fate as Telecom Italia board resigns

By Philip Willan and David Rohde
Network World, 05/25/99

A majority of the board of directors of Telecom Italia resigned today, following hardware/software vendor Olivetti's successful takeover bid for the company, Telecom Italia said. The move has left fellow Telecom Italia suitor Deutsche Telekom (DT) considering its role in this complicated merger before taking any action.

Technically, the board members are staying on until a new board is appointed, however, it is only in a caretaker capacity.

"The board will remain in place until its renewal, which will take place at the next shareholders' meeting," the statement said. The meeting is scheduled for June 28.

Industry Minister Pierluigi Bersani was due to hold talks with Olivetti CEO Roberto Colaninno about the future of the telecom operator. The Italian government has golden share powers in Telecom Italia, which let it veto any potential candidate interested in the carrier.

"There are technological gaps which need to be filled through international partnerships and alliances," Bersani told the ADN-Kronos news agency. "The government, correctly, has established certain conditions regarding the maintenance of national assets and reciprocity."

Talks on a possible merger with DT will not take place until Olivetti has had time to appoint new management personnel at Telecom Italia, reports said.

DT's attempt to buy Telecom Italia has already cost the company dearly, which may be why it is holding on to any faint ray of hope that the Olivetti deal will fall through.

Its long-time partner, France Telecom (FT), earlier this month sued DT in the International Court of Arbitration for what it viewed as DT's unauthorized dalliance with the Italian carrier. Sprint officials are nervously watching this European soap opera because Sprint, DT and FT are the current owners of the Global One international carrier venture - whose base heavily consists of U.S.-based multinationals. Some experts believe it may be too late to avoid a restructuring of Global One, which could ultimately leave either FT or DT with no solid international partnerships. A restructuring could also leave Sprint users eyeing other global carriers once their Global One contracts expire.