Telecom Italia Board to Vote on Scrapping Dual-Share Class in Key Restructuring Move

Key Takeaways

• Telecom Italia's board is meeting this Sunday, December 21, to discuss converting its non-voting savings shares into ordinary stock, according to Reuters.
• The move aims to simplify the company's capital structure and boost liquidity as it pivots following the sale of its fixed-line network.
• The conversion ratio will be the critical detail for investors, determining the financial outcome for both classes of shareholders.

Telecom Italia SpA is taking another major step in its corporate overhaul, with its board of directors set to meet this Sunday to approve a plan to convert its savings shares into ordinary shares.

The move, if approved, would eliminate the dual-class share structure that has been a feature of the former state monopoly for decades. It's a critical follow-up to the company's landmark deal to sell its prized landline grid, known as NetCo, to U.S. private equity firm KKR. For CEO Pietro Labriola, it's about creating a leaner, more agile company focused on service operations.

Why This Matters Now

By collapsing the two share classes into one, TIM aims to solve several long-standing issues. A single, more liquid stock is generally more attractive to a wider range of international investors. It simplifies corporate governance and makes the company's equity story easier to understand—a crucial advantage as it charts a new course post-NetCo.

"It’s about cleaning up the house," said one analyst familiar with the matter. "With the network sale creating a 'new TIM,' a simplified capital structure is the logical next step."

All Eyes on the Conversion Ratio

The deal's success hinges entirely on one number: the conversion ratio. This determines how many ordinary shares a savings shareholder will receive for each share they own.

What Investors Are Watching

• Savings Shareholders: They'll be looking for a premium over the typical price spread between the two stocks to compensate for giving up higher dividends.
• Ordinary Shareholders: Their main concern is potential dilution of their stake. The board must strike a balance to get their approval.
• Top Shareholder Vivendi: The French media giant's reaction will be crucial. Vivendi, which has opposed the NetCo sale, holds a significant stake in ordinary shares and its support could make or break the plan.

Historically, TIM's savings shares have traded at a discount to the ordinary shares. The size of the premium offered in the conversion will signal how keen the company is to push the deal through.

PRISM Insight

This isn't just financial housekeeping; it's a strategic reset. By eliminating the dual-class structure—a relic of many former European state-owned enterprises—TIM is signaling to the market that it's ready to operate as a modern service company. A single stock class makes it a cleaner asset, potentially more attractive for future M&A activity. The move could set a precedent for other legacy telcos in the region grappling with similar structural baggage and debt loads.