MILAN (Reuters) - Vivendi has proposed amendments to how it plans to reduce its position of influence at Italian broadcaster Mediaset, Italy's communications watchdog AGCOM said on Tuesday.
The regulator added that further talks were necessary in order to have more details on how Vivendi intends to "structurally" change its position in Mediaset.
AGCOM said in April that Vivendi's stake-building at both broadcaster Mediaset and Telecom Italia was in breach of rules designed to prevent a concentration of power in the country's telecoms and media sector and asked the French group to reduce its stake in one of the two companies.
Vivendi is the biggest single shareholder in Telecom Italia, with 24 percent, and recently bought 29 percent of Mediaset, making it the second-largest investor in Italy's biggest private broadcaster.
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In a statement, the regulator reiterated that Vivendi could face sanctions if it failed to comply with its ruling. Vivendi declined to comment.
Under Italian law, Vivendi could be fined an amount equal to between 2 and 5 percent of its revenues unless it complied with the divestment order.
Vivendi never said what its original proposal to the regulator was. Sources familiar with the matter have told Reuters that among the options on the table was a plan to cap Vivendi's voting rights at Mediaset at just below 10 percent and to transfer shares it holds above that threshold to a trust.
A source close to the matter said on Tuesday that Vivendi's proposal to limit its Mediaset voting rights to 9.9 percent was not sufficient in itself to allay concerns if the French group retained a significant influence at the broadcaster.
The source added that Vivendi's plan to place a stake of 20 percent in Mediaset in a blind trust was seen as a good solution as long as those shares can never be used by the French group to vote at shareholder meetings.
Any motions at extraordinary shareholder meetings require the support of two thirds of those present to pass.
If Vivendi was allowed to vote at such meetings with the entire 29 percent, it could, depending on the turnout, hold an effective power of veto on major strategic decisions.
Earlier this year, Vivendi, led by billionaire Vincent Bollore, appealed against the AGCOM ruling and the matter is due to be heard by a regional court in February next year.
Sources close to the matter have said Vivendi would argue that it does not control Mediaset and that AGCOM's ruling is an obstacle to a broader, industry-wide convergence of media and telecoms businesses.
Vivendi's stake building at Mediaset and Telecom Italia has also attracted the attention of the government and fuelled media and market speculation that the French company might seek to combine the two.
However, Vivendi's CEO Arnaud de Puyfontaine said last week that such an option was not on the agenda.
(Reporting by Agnieszka Flak and Francesca Piscioneri; Editing by Greg Mahlich)