Thousands Of Jobs To Go Under Telecom Italia Break-up Plan

Telecom Italia (TIM) is ready to part ways with its fixed network assets under an overhaul plan that includes at least 9,000 jobs cuts by 2030 as part of efforts to reduce its hefty debt, the company said on Thursday.

TIM, heir to the former national phone monopoly, is saddled with 23 billion euros ($24 billion) of net debt while contending with shrinking revenue in its fiercely competitive home market.

Under a strategic plan unveiled by new CEO Pietro Labriola on Thursday, TIM said it would spin off its domestic fixed access network and submarine cable unit Sparkle in a separate company called NetCo, which would carry up to about 11 billion euros of the company's debt.

Company slides showed that the plan from Labriola, TIM's fifth CEO in six years, involves cutting at least 9,000 jobs from its workforce of 41,000.

A central plank of the restructuring is a possible deal to combine NetCo with state-controlled rival Open Fiber, which would take control of the combined entity.

The combination with Open Fiber is the preferred option, but only if executed on attractive terms to both equity and debt holders, TIM said in presentation slides, without ruling out alternatives such as the sale of minority stakes in NetCo.

The valuation of NetCo is a sticking point with leading TIM shareholder Vivendi, which is pushing for TIM to obtain a premium price in ongoing negotiations on a potential Open Fiber deal.

DEBT REDUCTION

TIM is also counting on transactions such as the sale of a minority stake in the newly created enterprise services unit to reduce overall net debt below 5 billion euros, down from a pro-forma level of about 20 billion in the first quarter.

Shares in TIM reacted positively to the news and were up 2.5% at 0.26 euros by 0930 GMT, though they remain close to a record low of of 0.22 euros hit in March.

Analyst Andrea De Vita said the job cuts would cost about 2 billion euros and noted that there was little new on the potential Open Fiber deal or sale of other parts of the business.

TIM said its service operations will include Brazilian-listed unit TIM Brasil and domestic service activities, which will be split into two units, each with specific financial targets.

Next to the consumer arm, the enterprise company will combine connectivity services for big corporate and public administration clients as well as cloud, cybersecurity and Internet of Things businesses.

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