The Paris-based company, whose top investor is billionaire Vincent Bollore, is the largest shareholder of the former Italian monopoly with a 24% stake, which reflects a total initial investment in the company of 3.9 billion euros since 2015.

Private equity firm KKR made a non-binding approach to Telecom Italia (TIM) in November which was pitched at 0.505 euro per share, valuing Italy's largest telecoms company at 10.8 billion euros.

By comparison, Vivendi's average purchase price of Telecom Italia shares was 1.07 euros each, while the company's current book value for TIM shares is 0.63 euro against 0.83 euro per share as of June 2021, according to a Reuters calculation based on available documents.

A Vivendi spokesperson said the exact figure for the book value for TIM was 0.657 euro per share. TIM shares closed on Wednesday at 0.26 euro each.

In a call with reporters, Vivendi CEO Arnaud de Puyfontaine praised the recent appointment of TIM's new boss, Pietro Labriola, and confirmed that KKR's initial approach undervalued the phone company.

"It's a turning point for Telecom Italia," he said. "We consider its value very much higher than its current share price and that of the virtual value mentioned by KKR in its statement of intent."

Vivendi supports Labriola's turnaround plan for TIM, de Puyfontaine added.

A TIM board meeting to draw up a response to the KKR proposal will be held on Sunday once TIM's advisers complete an analysis to compare TIM's planned in-house revamp with KKR's plan, two sources close to the matter said.

Vivendi said it also took an impairment charge of 200 million euros on its wholly-owned mobile video game-maker Gameloft, reflecting a decline of the division's performance.

The company more than doubled its earnings before interest, tax and amortisation last year to 690 million euros thanks to strong growth at its pay-TV group Canal Plus, advertising unit Havas and publishing division Editis.

Vivendi did not provide targets for the current year.

($1 = 0.9039 euros)

(Reporting by Mathieu Rosemain and Elvira Pollina; Editing by Mark Potter, Leslie Adler and Jane Merriman)

By Mathieu Rosemain and Elvira Pollina