Pirelli Moves to Replace Telecom Italia Chairman

While Pirelli’s tyremaking business continues from success to success the controversy surrounding the company’s ill-fated involvement in Telecom Italia continues. The company’s dissatisfaction with various aspects of Telecom Italia’s strategy were made manifest on April 4 when Olimpia, the company jointly set up by Pirelli and the Benetton family to control Telecom Italia, excluded the communication group’s chairman Guido Rossi from a list of proposed new board members. However this move, tantamount to sacking Rossi, was immediately contested by two other prominent Telecom Italia shareholders on the grounds that the decision violated consultation agreements.

Rossi, a well-known corporate lawyer, has acted in the capacity of chairman since last September, taking on the role following the resignation of Marco Tronchetti after he publicly clashed with Italian prime minister Romano Prodi, a close associate of Rossi. However the boot is now on the other foot, with Tronchetti, as chairman of the Pirelli group, striving to oust his successor at Telecom Italia.

These latest actions come at a time when Pirelli is negotiating the sale of a majority of its stake to US telecommunications giant AT&T and Mexico’s América Móvil of Mexico – a deal that is generating intense political opposition. Previously Pirelli had attempted a sale to Spain’s Telefónica but, according to well-informed sources, the deal collapsed due to opposition by Mr Rossi and others at Telecom Italia.

These and other incidents, such as the dispute between Rossi and board directors about the company’s business plans, have led Tronchetti and his associates to lose confidence in Rossi’s handling of the company. It is now thought that board member Pasquale Pistorio, alleged to be a supporter of Tronchetti, will most likely assume the role of chairman.