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Eurobites: 15,000 Telecom Italia Jobs at Risk

Iain Morris
4/7/2016
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Also in today's EMEA regional roundup: Vodafone hails wireless backhaul breakthrough; Hutchison offers more concessions on O2 deal; Safaricom strikes broadband deal with Kenya Power.

  • Telecom Italia (TIM) is looking to slash as many as 15,000 Italian jobs -- about 30% of its domestic workforce -- because of looming competition from Enel SpA , an Italian energy company that recently announced a €2.5 billion ($2.85 billion) broadband plan, according to media reports. French media conglomerate Vivendi , which holds a 25% stake in Telecom Italia, was subsequently reported by Reuters to have played down concern about layoffs, insisting its investment in the operator is about long-term development and not redundancies. Nevertheless, Telecom Italia has been under pressure to find savings after struggling to grow its businesses in Italy and Brazil, its other main market, last year. After apparently clashing with Vivendi, Marco Patuano recently quit as Telecom Italia CEO and was replaced by Marco Cattaneo, formerly the CEO of high-speed train operator NTV. (See Telecom Italia Names Cattaneo as New CEO and Eurobites: Italy's Enel in $2.8B FTTH Plan.)

  • Vodafone Group plc (NYSE: VOD) claims to have made a breakthrough on wireless backhaul, recording connection speeds of 10 Gbit/s using E-band microwave technology. Tests in Romania with China's Huawei Technologies Co. Ltd. were carried out over distances of 1 kilometer in urban environments, the UK-headquartered operator pointed out, and delivered a "marked improvement" over previous deployments. Vodafone already uses E-band technology, which uses spectrum in the 70-80GHz range, in eight of its markets, but is now looking at introducing it in other countries following the tests in Romania. More capable microwave technology could provide a backhaul alternative to fiber networks, which remain unavailable or prohibitively expensive in some of Vodafone's markets.

  • Hong Kong's Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) was reported to have offered to make further concessions to secure regulatory approval of its planned £10.25 billion ($14.4 billion) takeover of the UK's second-biggest mobile operator Telefónica UK Ltd. , which trades under the O2 brand. Hutchison wants to merge the operator with 3, the country's fourth-biggest mobile operator (which it already owns), to create a new market leader, overtaking current king pin EE (now part of BT), but European Union authorities are thought to be worried about the impact the move would have on competition. According to a report from the Financial Times, Hutchison is now offering to give satellite TV player Sky about a fifth of the combined company's network capacity, allowing Sky to provide 4G services to its own customers, and cable operator Virgin Media Inc. (Nasdaq: VMED) about 10% of network capacity. It is also said to have proposed selling O2's 50% stake in Tesco Mobile, an MVNO whose other half is owned by the Tesco supermarket chain. (See Orange & Hutch: A Tale of Two Takeovers, Eurobites: O2 & 3 May Not Become One, Eurobites: 3 & O2 Deal to Fail – Analyst and UK Needs O2/3 to Challenge BT/EE – Analyst.)

  • Sticking with Hutchison, Nicholas Högberg, the CEO of Hutchison's 3 business in Sweden, was reported to have resigned his position after spending nine years at the company, including four in the leadership role. Board member Peder Ramel will take over, according to local publication SvD News, until a permanent replacement can be found.

  • Kenyan operator Safaricom Ltd. was said to have signed an agreement with utility company Kenya Power to deploy fiber-optic broadband services using the electricity distribution network. According to a report from allAfrica.com, Safaricom will lease Kenya Power infrastructure to help it roll out a last-mile fiber network. Safaricom has already deployed about 3,200 kilometers of fiber to 7,000 Kenyan homes, according to the report, while Kenya Power owns and operates 4,000 kilometers of fiber-optic cable in the country. The initial collaboration between the two companies will apparently target more than 12,000 homes during a 12-month pilot.

  • Elsewhere in Africa, France's Orange (NYSE: FTE) completed its takeover of Cellcom's Liberian subsidiary, which serves about 1.3 million customers in the small west African country, giving it a market share of about 45%. The deal is one of several that Orange has recently struck in the west and central African region, which the French operator sees as an important driver of revenue growth given the pressure it faces in more developed European markets. (See End of the Bouygues Affair for Orange, Orange Expands in Africa With Cellcom Liberia Acquisition, Orange Aims for 20% Sales Growth in Africa, Orange Strikes $160M Deal for Tigo DRC and Orange Buys Airtel Ops in Burkina Faso, Sierra Leone.)

    — Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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