ROME: Debt-burdened Telecom Italia, Europe's fifth-biggest telecoms provider, will shed non-core assets worth up to $3.82 billion and cut 5 per
cent of its workforce in a bid to slash borrowings and trim costs amid a weak economy.
But the company confirmed it aims to strengthen its presence in Brazil as part of its 2009-2011 business plan announced, despite recent reports that it could consider splitting off or selling the unit.
The strategy focuses heavily on slashing costs and trimming its 37 billion euro debt load and relies on growth largely from Italy and Brazil. Telecom's Brazil unit, TIM Participacoes SA, has seen the highest growth for years in the group.
It will also expand in Argentina by exercising a call option to raise its stake in Sofora, the company which controls Telecom Argentina. Non-core assets worth up to 3 billion euros will be divested.
Telecom Italia said it would work to cut overall costs and investments by some 2 billion euros over the next three years, with 40 per cent of those savings coming in 2009. It will cut 4,000 jobs, on top of existing plans to cut 5,000 jobs by 2010. It had around 80,000 employees at the end of September.
The company said it expects 2009 revenue and organic earnings before interest, taxes, debt and amortisation (EBITDA) in line with those of 2008, and forecast investments of around 4.8 billion euros next year.
It expects to grow organic revenues by 3 per cent annually over the three-year period, while generating free cash flow of around 22 billion euros. It forecast cutting its net debt/EBITDA ratio to 2.3 by 2011 from around 3 in 2008.
Telecom Italia shares have halved in value from a year ago partly over doubts related to its belt-tightening strategy. They are trading at around one euro, giving the company a market value of about 17.55 billion euros.
But its shares have rallied nearly 13 per cent over the past month amid signs Chief Executive Franco Bernabe's efforts to trim debt and cut costs without major fireworks are bearing fruit.
Courtesy: Times of India
cent of its workforce in a bid to slash borrowings and trim costs amid a weak economy.
But the company confirmed it aims to strengthen its presence in Brazil as part of its 2009-2011 business plan announced, despite recent reports that it could consider splitting off or selling the unit.
The strategy focuses heavily on slashing costs and trimming its 37 billion euro debt load and relies on growth largely from Italy and Brazil. Telecom's Brazil unit, TIM Participacoes SA, has seen the highest growth for years in the group.
It will also expand in Argentina by exercising a call option to raise its stake in Sofora, the company which controls Telecom Argentina. Non-core assets worth up to 3 billion euros will be divested.
Telecom Italia said it would work to cut overall costs and investments by some 2 billion euros over the next three years, with 40 per cent of those savings coming in 2009. It will cut 4,000 jobs, on top of existing plans to cut 5,000 jobs by 2010. It had around 80,000 employees at the end of September.
The company said it expects 2009 revenue and organic earnings before interest, taxes, debt and amortisation (EBITDA) in line with those of 2008, and forecast investments of around 4.8 billion euros next year.
It expects to grow organic revenues by 3 per cent annually over the three-year period, while generating free cash flow of around 22 billion euros. It forecast cutting its net debt/EBITDA ratio to 2.3 by 2011 from around 3 in 2008.
Telecom Italia shares have halved in value from a year ago partly over doubts related to its belt-tightening strategy. They are trading at around one euro, giving the company a market value of about 17.55 billion euros.
But its shares have rallied nearly 13 per cent over the past month amid signs Chief Executive Franco Bernabe's efforts to trim debt and cut costs without major fireworks are bearing fruit.
Courtesy: Times of India
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