Telecom Italia on Wednesday announced major changes at the Italian telecommunications giant in an attempt to revive growth and reduce debts.
The changes included cutting 4,000 domestic jobs, in addition to the 5,000 layoffs agreed to with unions three months ago, and selling non-core assets for as much as three billion euros.
Telecom Italia CEO Franco Bernabe' said the job cuts would reduce total staff by 14%, from 64,00 to 55,000, and include a whopping 50% slash in managerial positions.
All operations are part of a 2009-2011 business plan which Bernabe' presented here to the financial community, the second such plan he has drawn up since assuming office a year ago.
In his presentation, Bernabe said that over the next three years Telecom Italia intended to focus its attention on its activities in Italy, Brazil and Argentina, and that anything else would be subject to sale.
Telecom Italia this year already sold off its interests in France and Bernabe's statement appeared to indicate that it would sell off its investment in Germany's Hansenet.
The plan's major asset cuts include other broadband operations in Europe; Telecom Italia's interests in Cuba's mobile operator ETECSA (Empresa de Telecomunicaciones de Cuba); and Telecom Italia Sparkle, which offers international voice services through its long-distance network.
All this will allow Telecom Italia not only to expand in Brazil, where it is the third-biggest operator, but also exercise its call option for a controlling stake in Telecom Argentina.
TELECOM ITALIA TO SELL MEDIA ASSETS.
In Italy, Telecom Italia intends to sell off its media services division but not as a whole, retaining assets it feels are important to develop its own IPTV (Internet Protocol TV) business.
''We want to be present in the IPTV sector and are now reorganising to see what we can sell and what we can keep to develop this business,'' Bernabe' explained.
IPTV involves providing digital programming through the Internet as opposed to the traditional broadcast and cable systems.
Telecom Italia Media includes the independent TV channel La 7, formerly TeleMonteCarlo, the MTV music channel and Telecom Italia News, which includes the APCOM press agency.
Bernabe' stressed that any and all sales of assets ''will be at the right time, at the right price and to the right buyer''.
The Telecom Italian CEO also said that former Italian phone monopoly had no plans to sell or spin off its fixed-line wire network, which he said would remain one of the group's core businesses.
However, he did say that Telecom Italia may enter into ventures with other communications companies which use its network, like Vodafone and Fastweb, to provide their telephone and Internet services.
REVENUE TO REMAIN STABLE.
Telecom Italia currently has debts in the neighborhood of 36 billion euros, or some three times its gross earnings.
The new business plan aims at reducing this ratio to 2.3 by the end of 2011.
The Italian communications group expects revenue this year to be some 30.4 billion euros, compared to 31.7 billion euros last year. The new business plan predicts it will remain stable in 2009 to then rise slightly, by 1-2%, in 2010 and 2011.
During the presentation of the new business plan, Bernabe' ruled out the possibility of any rights issue to boost the group's capital but would give no indication whether dividends for 2008 would be cut, after being halved in 2007, saying only that a decision on this would be made in February.
Bernabe's hedging on the dividend question sent a negative message to the stock market where Telecom Italia's shares, after initially rising 1.4% in the morning, first plunged by 2.8% and then fell by almost 5% before reducing losses to just under 4% by late afternoon.
