Cernobbio, Italy - Vivendi SA’s investment in Telecom Italia SpA is the French company’s first step in building a media group with a distinct focus in southern Europe, according to its chief executive officer, who doesn’t rule out further boosting its stake in Italy’s largest telecommunications provider.

The owner of broadcaster Canal Plus and Universal Music Group fully supports Telecom Italia’s management and its strategy, including the rollout of an ultra-fast broadband network that could help Vivendi distribute content, Arnaud De Puyfontaine said in an interview with Bloomberg Television in Cernobbio, Italy. While the companies have held discussions about Brazil, Vivendi doesn’t have a “firm view” on the future of Telecom Italia’s local unit Tim Participacoes SA, he said.

“Rome was not built in a day,” De Puyfontaine said in the northern Italian town, where he was attending a business conference. “When you got a big plan you have different steps and it’s not by the snap of your fingers that you do that. It’s gonna be a project on the long term and you never say never. What I can say is we are very happy with our current position in Telecom Italia.”

Under Chairman Vincent Bollore, Vivendi has acquired a holding of almost 15 percent in Telecom Italia, and is looking for deals to transform the media group to take on Google and Apple as well as traditional rivals such as Sky. Vivendi has accumulated 9 billion euros ($10 billion) in cash after disposing of telecommunications assets in countries including France and Brazil. It retains a minority stake in video-game company Activision Blizzard.

While De Puyfontaine said during the conference that Vivendi isn’t interested in buying former Italian Prime Minister Silvio Berlusconi’s broadcaster Mediaset SpA, people familiar with the matter have told Bloomberg that Vivendi would be open to a significant investment in Mediaset Premium, the company’s pay-TV unit.

Spotify partnership

Canal Plus, Vivendi’s own pay-TV division, last week reported a 9 percent decline in second-quarter earnings before some items, partly because of spending on sports broadcasting rights. A surge in demand for music streaming services such as Spotify - in which Vivendi has a stake - helped Universal Music increase sales by 19 percent.

“With Spotify we are happy with the current situation,” the CEO said. “We would like Spotify to spend more in terms of paid subscriptions rather than free offering.”

The Spotify partnership underscores the importance for owners of music and films such as Vivendi to follow how consumers access content. As more people turn to phone companies for subscriptions that allow them to watch movies and sports events, Telecom Italia last month reached an accord with Mediaset to make pay-TV programmes such as soccer’s Champions League available to the carrier’s broadband customers.

For years Bollore has had strong ties to Italy’s business elite. The 63-year-old billionaire, now Vivendi’s top investor with a 14.4 percent stake, was previously deputy chairman of insurer Assicurazioni Generali SpA and is the second-largest shareholder of investment bank Mediobanca SpA.

“Bollore has a high level knowledge of Italy, this is a way to be able to embrace the opportunity to build a very solid media group in southern Europe,” De Puyfontaine said. “Other potentials may be part of these possibilities to do things in the media but it’s early days to be more specific about it.”

Telecom Italia rose 1.6 percent to 1.11 euros at 9.05am in Milan. Vivendi added 1.2 percent to 21.45 euros in Paris.

Bloomberg