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Capex Watch: Telecom Italia Plans Cuts

Much of the focus on Telecom Italia (TIM) this week has been on its new headcount reduction plan, which will see an additional 4,000 staff lose their jobs during the next three years. (See T Italia Axes 4,000 More.)

But behind that headline news was a pasta fagioli of other details that came as part of the Italian incumbent's new three-year industrial plan.

One of those snippets concerned the operator's overall capital expenditure (capex) plans. And, not surprisingly, it involves a fairly significant group-wide reduction.

Presenting his new three-years strategy to investors and analysts this week, CEO Franco Bernabè said Telecom Italia's annual capex would fall by more than 11 percent -- from €5.4 billion (US$6.8 billion) in 2008 to €4.8 billion ($6.06 billion) in 2009.

Breaking that down further, domestic capex will drop from €3.5 billion ($4.4 billion) this year to €3.3 billion ($4.16 billion) in 2009, while capex in Brazil, the carrier's other main market, will drop from 3.7 billion Brazilian Reais ($1.48 billion) to BRL2.8 billion ($1.18 billion).

That news puts extra pressure on the telecom sector's vendors to find new growth markets that can offset such spending reductions. (See More Russian Capex Cuts, Capex Watch: VimpelCom Cuts Back, Capex Watch: Expect Shrinkage in 2009, Russian Altnet Makes FTTx Plans, and Emerging Markets Offer Capex Hope.)

— Ray Le Maistre, International News Editor, Light Reading

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