MILAN/ROME (Reuters) – Telecom Italia’s (TIM) network can cope with the surge in traffic driven by the coronavirus crisis, CEO Luigi Gubitosi was quoted as saying on Wednesday, as U.S. activist hedge fund Elliott Management cut its stake in the group.
FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan, Italy, May 25, 2016. REUTERS/Stefano Rellandini/File Photo
The strategic role of TIM’s telecoms network – as well as the need for an upgrade – has taken center stage in the healthcare emergency, which has confined Italians to their homes and forced millions to embrace remote working and online learning.
“TIM’s network is well-built. It is very solid and stable and can hold additional traffic with no problems,” Gubitosi told the Corriere della Sera newspaper.
His comments follow a decision by Elliott to reduce its TIM stake to 6.97% from 9.72%. A person familiar with the matter, who asked not to be named, cited a “portfolio rebalancing” given the market situation.
The source said that Elliott remains committed as a TIM investor and supported the group’s board and management.
Shares in TIM fell 4.2% by 1431 GMT, underperforming a 1.3% drop in Milan blue-chip index.
Paul Singer’s Elliott hedge fund, with assets under management of about $40.2 billion at Dec. 31, has been increasingly active in Europe, taking stakes in some of the region’s largest companies, including SAP, Bayer and Altran in the past year.
Investors face heavy losses as the coronavirus outbreak devastates financial markets, driving the pan-European STOXX 600 index down by a quarter in the year to date.
Gubitosi said that the coronavirus lockdown measures imposed by Italy’s government had nearly doubled traffic on landlines while traffic on mobile lines had risen by 30%.
“We believe that Telecom Italia has proved to be one of the most resilient businesses since the outbreak of the virus as more and more users are connected to TIM’S network,” Fidentiis analyst Pietro Solidoro said in a note.
“We believe that Elliott’s commitment to Telecom Italia has remained unchanged despite the slight reduction in the position.”
Reporting by Elvira Pollina, Giulia Segreti; Editing by Barbara Lewis and David Goodman