Elliott further trims stake in Telecom Italia

MILAN (Reuters) - U.S. hedge fund Elliott Management has further cut its stake in Italy’s biggest phone group Telecom Italia (TIM), a regulatory filing showed, amid an ongoing portfolio rebalancing as COVID-19 rocks financial markets.

Paul Singer’s activist fund first invested in TIM in 2018 and went on to challenge its top investor, French media group Vivendi, managing to secure two-thirds of board seats at the former telecoms incumbent.

Elliott took part in TIM’s annual general meeting last week as the group’s third-largest investor behind Vivendi and Italian state-owned lender CDP.

Italian stock market regulator Consob said on Thursday Elliott on April 28 had cut its stake in TIM to 0.265% from 6.976% previously.

On the same day, Elliott built a long position on 4.862% of TIM through a swap contract with JPMorgan which can only be settled in cash and expires on May 30, 2023, for an overall potential stake of 5.127%, Consob said.

Voting rights are currently limited to the 0.265% actual stake, the Consob filing showed.

The move comes after Elliott trimmed its stake in TIM last month down from 9.72%, a decision which a person familiar with the matter attributed to portfolio rebalancing needs.

The person said on Thursday the latest changes in the size and form of the stake were only “a technical adjustment” following the AGM, which had allowed Elliott to take advantage of better financing conditions.

The person said Elliott would remain “engaged with the company ... in the months ahead, building upon the constructive dialogue in recent months.”

Reporting by Elvira Pollina; editing by Valentina Za and Chizu Nomiyama

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