Italian incumbent to cut thousands of jobs as it tackles declining revenues in its domestic market

April 20, 2010

2 Min Read
Axe Falls Again at Telecom Italia

Telecom Italia (TIM) has expanded its headcount reduction program for the next few years, with plans to cut an additional 4,522 jobs by the end of 2012.A spokeswoman for the carrier says that job cuts amounting to 2,300 positions have already been concluded with the unions and that the new reduction, to be discussed with employee representatives, means the operator plans to reduce its overall staff numbers by 6,822 between now and the end of 2012.

The carrier, which recently announced a 6.3 percent drop in annual revenues to €27.16 billion (US$36.7 billion), ended 2009 with 71,384 on staff and has since cuts its domestic workforce by about 1,300 positions. (See Telecom Italia Reports 2009.)

And the incumbent is preparing for another year of shrinkage, as it expects its group revenues to fall again in 2010 by 2 to 3 percent, with mixed fortunes for its two main markets: Revenues are set to dip again in Italy, as the carrier's traditional fixed voice service revenues continue to fall, while sales in Brazil are set to increase, driven by ongoing mobile service demand. (See Brazil Preps for Mobile Upheaval.)

Reducing its headcount isn't the only way the operator plans to cut its costs in this and the following few years, as it is working on a number of ways to reduce its operating and capital expenditures. Telecom Italia has cut its annual capex budget for 2010 by about 6.5 percent to €4.3 billion ($5.8 billion) and has earmarked a total of €12 billion ($16.2 billion) for the 2010-2012 period for investment in Italy and Brazil, the two markets on which it is now focused, following a revamp of its international portfolio. The operator has also made it clear it isn't planning any international acquisitions. (See Telefónica to Buy Hansenet.)

The Italian carrier plans to pump its cash mainly into new-generation fixed and mobile broadband developments and has already set out its vision for a high-speed access future. (See BBWF: WDM PON? Bring It On! and Huawei, Telecom Italia Test LTE.)

It's been a rough start to the year for Telecom Italia, which has found itself engulfed in a money-laundering investigation and been the subject of takeover speculation. (See Italian Fraud Probe Intensifies and Is Italian on Telefónica's Menu? )

— Ray Le Maistre, International Managing Editor, Light Reading

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