(Updates with company comment)
By Jennifer Clark and Jonathan Vuocolo
Of DOW JONES NEWSWIRES
Telecom Italia SpA (TI) Chairman Guido Rossi resigned Friday, two days after losing the support of Telecom's largest shareholder over the company's future strategy.
The resignation was largely expected, and a spokesman for Telecom Italia said Carlo Buora, currently the deputy chairman, will step in as interim chairman until a planned shareholders meeting on April 16.
At that time, shareholders are expected to vote on whether to approve Pasquale Pistorio, a Telecom Italia director and former chairman of semiconductor firm STMicroelectronics NV (STM), as the new chairman.
Rossi's departure is a consequence of the recent stormy developments at Telecom Italia. Late on Sunday, Pirelli & C. SpA (PC.MI) announced that it had started one month of exclusive talks to sell a combined 66% of its stake in Olimpia SpA, which controls Telecom Italia, to AT&T Inc. (T) and America Movil SA de CV of Mexico (AMOV).
The move, which would make foreign companies the two single largest shareholders of Telecom Italia, alarmed the Italian government, which promptly urged Italian investors to come up with an alternate solution.
People familiar with the matter said earlier this week that France Telecom SA (FTE) and Telefonica SA (TEF) are considering individual counteroffers to the AT&T (T) and America Movil suggested bids. The two European telecoms firms are also considering teaming up with Italian financial institutions to prepare a more politically palatable offer for the Olimpia stake.
Meanwhile, Italian bank Intesa Sanpaolo SpA (ISNPY) said it is ready to team up with other financial institutions to end the battle for control of Telecom Italia and keep the company in Italian hands, without ruling out a partnership with AT&T and America Movil.
Olimpia, the holding company set up by Pirelli and Italy's Benetton family to control Telecom Italia, withdrew its support of Rossi by leaving his name off of a list of proposed board nominees released this week.
That means Rossi effectively would have been ousted at the shareholders meeting had other shareholders not actively backed him. Two of Telecom Italia's largest shareholders, Mediobanca SpA (MB.MI) and Assicurazioni Generali SpA (G.MI) suggested earlier this week that they might have done so, but they never did. Pistorio is Olimpia's proposed replacement, people familiar with the matter say.
-By Jennifer Clark, Dow Jones Newswires; 39 335 833 5761; jennifer.clark@Dowjones.com; and Jonathan Vuocolo; Dow Jones Newswires; 201-938-5964; Jonathan.Vuocolo@dowjones.com
(END) Dow Jones Newswires
April 06, 2007 12:40 ET (16:40 GMT)