Telecom Italia to sell assets, save cost and cut 4,000 jobs
03 Dec 2008
Italy's largest phone company, Telecom Italia said yesterday that it would sell some of its non core assets worth €3 billion, cut costs by around €2 billion and eliminate another 4,000 jobs in Italy, as part of an overall three-year restructuring plan to reduce its massive €35 billion debt burden.
Telecom Italia chief executive Franco Bernabé said the aim of the three-year restructuring plan was to continue the trend of improving revenue dynamics and margins which began in 2008, and restore the company's selective path to growth, characterised by strict financial discipline.
The company had launched cost cutting measures in June this year aimed at saving at least €2 billion by 2011 and had announced the elimination of 5,000 jobs from its 66,000 workforce in September 2008 on a voluntary basis, to be carried out through 2010 in agreement with its union. The aditional 4,000 job cuts will be made at its Italian operations to reduce cost, the company said.
Telecom Italia also plans to raise as much as €3 billion by selling some of its non-core assets and the company, which has its operations in Italy, Brazil, Argentina, Germany and Cuba, may consider selling its European broadband services division Sparkle, and may also hive-off its stake in Cuba's mobile operations- Empresa de Telecomunicaciones de Cuba.
It also owns a mobile company in Brazil, TIM Brasil, a broadband company in Germany Hansenet and a stake in the holding company of Telecom Argentina.
The company dismissed reports that it may sell its Brazilian operations to reduce the debt burden and saying future growth is expected to come from Brazil and Italy, and to a lesser extent, from Argentina. It said there was tremendous growth opportunity from fixed to mobile substitution, as well as using mobile as a broadband growth enabler in Brazil.
Telecom Italia forecasts more than 2.5 million mobile broadband customers by 2011, and an estimated market of around 25 per cent as it cfomes under pressure from its shareholders to reduce its massive debts, which it amassed to fend off hostile takeovers.
Telecom Italia had agreed to sell its French business to Iliad in August this year.