Telecom Italia to cut 5% of workforce, shed non-core assets

3 Dec 2008

Reuters reports that Telecom Italia (TI) has announced plans to cut 5% of its workforce and shed non-core assets worth up to USD3.8 billion in a bid to reduce its USD47 billion debt pile, trim costs and counteract the effects of a weak economy. TI’s 2009-2011 business plan aims to cut overall costs and investments by some USD2.5 billion over the next three years, with 40% of savings coming in 2009, whilst making 4,000 additional job cuts on top of existing plans to lose 5,000 staff by 2010. The group had around 80,000 employees at the end of September. The strategy heavily relies on growth from Italy and Brazil. The company confirmed it aims to strengthen its presence in Brazil, despite recent reports that it was considering spinning off or selling TIM Participacoes. It will also expand in Argentina by exercising a call option to raise its stake in Sofora, the company which controls Telecom Argentina. TI expects 2009 revenue and organic EBITDA in line with those of 2008, and expects organic revenue to grow by over 2% annually over the three-year period. It forecast cutting its net debt/EBITDA ratio to 2.3 by 2011 from around 3.0 in 2008.

Italy, Telecom Italia (TIM)