Telecom Italia’s cost cutting initiatives

5 Jun 2008

According to a report in the Financial Times, the Italian incumbent Telecom Italia (TI) has unveiled plans to slash its operating costs as it does not expect to see significant revenue increases in the near future. CEO Franco Bernabe told the newspaper he wants to secure a 40% cut in the EUR2 billion (USD 1.5 billion) operating costs associated with running its Italian fixed line and mobile networks by 2015 and aims for a similar reduction in costs related to marketing, advertising and customer care. The cuts should be possible on the back of new optical fibre infrastructure, which will increase fixed line broadband speeds and require less maintenance and fewer engineers. It also plans to make savings in real estate and will spend EUR350 million to cut 5,000 jobs by 2010, making savings of EUR300 million a year once the job reduction is complete.

Bernabe added that he has approached private equity firms and sovereign wealth funds about the possibility of them co-financing deals outside Italy, but he ruled out large-scale acquisitions in emerging markets because of the company’s large debt.

Italy, Telecom Italia (TIM)