PARIS/MILAN/LONDON (Reuters) - French media group Vivendi (>> Vivendi) plans to increase its stake in Telecom Italia (>> Telecom Italia SpA) to between 10 and 15 percent, cementing influence over the group once its current big shareholders exit, people familiar with the matter said.
The proposal is still under discussion internally and would need to be ratified by the Vivendi board.
Vivendi and Telecom Italia declined to comment.
Vivendi is already on track to become Telecom Italia's biggest shareholder when it receives an 8.3 percent stake as part-payment for selling Brazilian broadband group GVT to Spanish carrier Telefonica (>> Telefonica SA).
The French company is expected to begin buying additional shares in the coming weeks, the sources said, following the dissolution of the Telco investment vehicle that holds 22.4 percent of Telecom Italia on behalf of Telefonica and three Italian financial institutions.
Such a move would make Vincent Bollore, Vivendi's chairman and largest shareholder, a major player in European telecoms again only months after the group finished selling all three of its mobile businesses.
With Telecom Italia seen by sector executives and bankers as a potential takeover target, the 63-year old Breton billionaire could play king-maker in the coming consolidation.
It will also make him more influential in Italy where his Groupe Bollore (>> BOLLORE) owns 7.46 percent of investment bank Mediobanca (>> Mediobanca Group).
He or another representative from Vivendi could join the board of Telecom Italia, said one of the people.
"Bollore wants to be the man determining Telecom Italia's future," said a second person close to the situation.
Vivendi also sees the move as a way to expand into a promising European market, said the first source, while ensuring wider distribution of content produced by subsidiaries Universal Music Group and French pay-television operator Canal Plus.
It already has a partnership with Telefonica on content production that came out of the GVT sale, and hopes to do something similar at Telecom Italia, said the person.
Since exiting telecoms, Vivendi has set a goal of becoming a European media powerhouse via organic growth and acquisitions.
Chief Executive Arnaud de Puyfontaine said in mid-May that Vivendi does not have a broader strategy of buying minority stakes in telecom groups and would be "opportunistic" about Telecom Italia.
WINDOW OF OPPORTUNITY
The departure of old shareholders in Telecom Italia opens a window for a new player to exert influence.
To some extent, Bollore would seek to replicate the playbook he used to effectively take control of Vivendi by building up a 14.5 percent stake over several years until he became the group's uncontested chief.
Telefonica, the insurer Generali (>> Assicurazioni Generali SpA) and banks Mediobanca (>> Mediobanca Group) and Intesa (>> Intesa Sanpaolo SpA) are getting out of Telecom Italia, which has been a money-losing venture for them since they entered in 2007.
They will be able to sell their Telecom Italia shares in coming days, probably from early next week, when the dissolution of the holding is complete.
Mediobanca's 1.6 percent stake, worth about 250 million euros at current prices, will be sold on the open market by the end of June, a source earlier told Reuters.
Generali has said its 4.3 percent stake, worth 660 million euros at current prices, is non-core, while Intesa has said it plans to sell its 1.6 percent stake by 2017.
Mediobanca, Intesa and Generali declined to comment.
CHESS GAME
For Vivendi, investing in Telecom Italia would be a turnaround from the past two years in which it has sold nearly 36 billion euros of telecom and video game assets to focus exclusively on media.
It has kept some telecoms exposure by accepting payment for GVT partly in shares in Telefonica Brasil
When asked by investors to explain why it has kept a presence in telecom, Vivendi has said carriers can help it achieve broader distribution by bundling its television, music, and web content into their broadband and mobile packages.
Beyond the content play however, Bollore, who earned part of his fortune by raiding companies such as industrial pipe maker Vallourec (>> Vallourec) and ad agency Havas (>> HAVAS) and pushing for changes, also believes there is a financial coup to be played out at Telecom Italia, said the people.
"This is too good an opportunity to miss," said a third person.
Key questions on which Vivendi could weigh would be whether to sell TIM Participacoes (>> TIM Participacoes SA), Brazil's second-biggest mobile operator, and how much to invest in high-speed fibre broadband in Italy where the government wants Telecom Italia to do more to upgrade old infrastructure.
France's Orange (>> ORANGE SA) and Germany's Deutsche Telekom (>> Deutsche Telekom AG) have also shown interest in buying Telecom Italia, sector bankers and company executives have said.
Another option floated by bankers and political sources in recent months is the idea that Vivendi could swap its Telecom Italia shares for a stake in Italian broadcaster Mediaset (>> Mediaset SpA), which is 33.4 percent owned by former prime minister Silvio Berlusconi.
Berlusconi's son ruled out in late April selling the family's stake in Mediaset, adding that he did see "opportunities" to work with Vivendi.
But such manoeuvres will come only after Vivendi becomes the key player at Telecom Italia, said the second person.
"Once Vivendi gets 15 percent and starts exercising some influence on the board they will see what is best to do."
(Additional reporting by Danilo Masoni and Stefano Rebaudo; Editing by Andrew Callus and David Evans)
By Leila Abboud, Paola Arosio and Pamela Barbaglia
