TIM is strengthening its ties with majority shareholder Vivendi after creating a content JV with the French company's pay-TV arm Canal+.

The unit will build a premium video service, which TIM said it will use to spark demand for its fibre products.

Activities will focus on rights acquisition and creation of both Italian and international content, offering both linear channels and on-demand services.

The Italian operator and Canal+ will respectively hold a 60 percent and 40 percent stake in the unit. A board of directors comprising three members appointed by TIM and two by Canal+ will lead the JV, with a CEO to be chosen from this board.

TIM CEO Amos Genish, who was appointed to the role last month, said: “With this transaction, TIM is taking an important step forward in the strategy of convergence between telecommunications and media.”

Jacques du Puy, CEO of Canal+ International, said: “This is a major market and we are looking forward to developing together with TIM premium content by leveraging our expertise in the production of high-quality films, TV series and documentaries.”

TIM, which offers TV services through the TIMvision service, has been looking for ways to extend the reach and take-up of its fibre services, which currently serve around 1.5 million customers through both FTTH and FTTC technologies.

In September the operator signed a deal with Italian utilities providers to use their infrastructure to roll out fibre.

Canal+, which has over eight million subscribers in its home market France, exited the Italian TV market in 2002.

Its owner Vivendi has also accrued a stake in Italian broadcaster Mediaset alongside its stake in TIM, which the country's communications regulator Agcom has argued violates media plurality rules.

The regulator said in April that Vivendi should reduce its stake in one of the two companies to under 10 percent and gave it 12 months to comply. The group holds a 23.94 percent stake in TIM and 28.8 percent in Mediaset.

The news comes a week after TIM revealed the Italian government had decided to intervene in the ongoing dispute over Vivendi’s holding in the company by imposing restrictions on the way the company is run.

The "golden power" measure allows the government to exercise control in companies considered to be national strategic assets, such as TIM, a former state monopoly.

In particular, the government requires company activities at TIM and its subsidiaries relating to national security to be headed up by an Italian citizen who has been given security clearance and approved by the government for the role.

In its statement today, TIM said the Board had begun to review the measures imposed by the government and signalled it planned to cooperate.

“TIM fully shares the government’s worries concerning the protection of security and national defence, and with respect to these needs it intends, irrespective of any further evaluation in legal terms, to engage in all useful discussions with a spirit of full collaboration,” it said.

The government’s decision follows Italian financial regulator Consob concluding in September that Vivendi holds de facto control of TIM due to its large shareholding in the company and the presence of its CEO, CFO and General Counsel on its Board of Directors.

The finding followed an investigation to establish whether Vivendi breached a requirement to notify the Italian government that it effectively controlled the company.

TIM and Vivendi are both challenging Consob’s ruling.

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