Telecom Italia to cut 4,000 more jobs

December 6, 2008

, MILAN, December 3 – Italian telecommunications group Telecom Italia said on Wednesday it would cut a further 4,000 jobs in Italy under its new business plan covering 2009 to 2011.

Telecom Italia, saddled with debt of 35 billion euros (44 billion dollars), had already planned 5,000 job cuts in Italy under the 2008-2011 plan focused on cutting costs.

The group has also announced its intention to sell non-strategic operations in deals that could be worth up to 3.0 billion euros.

Telecom Italia, which had a turnover of 31.3 billion euros in 2007 for a net profit of 2.5 billion euros, employs about 66,000 people in Italy and is also present in Brazil, Argentina and Germany.

Unions agreed in September to the first batch of 5,000 job cuts, by normal departures through the end of 2010, and new negotiations will be needed on the second batch.

The new business plan along with other measures aims to achieve savings of two billion euros by 2011 and a sharp reduction of the debt, the group said in a statement.

It now forecasts that its turnover and margins over the next three years will be in line with those of 2008, with more than 2.0 percent growth in revenues and margins of more than 39 percent.

The announcement was eagerly awaited by the markets. Telecom Italia\’s share price shed 1.5 percent to 1.026 euro as the Milan stock market opened before gaining 1.4 percent to 1.05 euros in early trades.

The 2008-2010 plan, announced in March, had left investors cold and disappointed some shareholders who thought it was not ambitious enough, while the influential Benetton family threatened to sell its stake.

"Ppreviously, we announced a return to fundamentals, notably, the objectives of cash generation, debt reduction, and the correct revenue dynamics and margin growth performance one expects of a company of our size and operating abilities," Telecom Italia\’s CEO Franco Bernabe said in the statement.

"The conditions that have since emerged on the market and in the real economy mean that it is necessary to be even more incisive in our priority of debt reduction," he said.

"We will strive even harder to keep operating costs and investments in check." Bernabe said.

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