Informacion economica sobre Cuba

Telecom Italia Cuts 2009 Sales Target, to Trim Jobs (Update2)
By Chiara Remondini

Dec. 3 (Bloomberg) — Telecom Italia SpA, Italy's largest phone company,
cut its revenue growth forecast for a fifth time in three years because
of a deteriorating economy and said it will trim another 4,000 jobs in

Sales in 2009 will be in line with 2008, the Milan-based company said in
a statement today. In March, Telecom Italia predicted revenue, excluding
currency moves and acquisitions or disposals, would rise 1 percent to 2
percent in 2009. Telecom Italia pledged to keep cutting debt and said it
may sell as much as 3 billion euros ($3.8 billion) of assets in Europe
and Cuba while keeping its Brazilian mobile-phone company.

"There is strong competition in the sector and that explains why they
see little or no growth in terms of revenue next year," Angelo Drusiani,
a money manager at Banca Albertini Syz & C. in Milan, said in a
Bloomberg Television interview. "On the other hand job cuts will help
reduce costs."

Chief Executive Officer Franco Bernabe today presents his second
business plan since his appointment a year ago, after telling investors
in March not to "expect fireworks." Bernabe, 60, is facing pressure from
shareholders to come up with a strategy to revive growth and the share
price while reducing debt.

On Nov. 7, the company reiterated its 2008 targets after cutting its
full-year revenue forecast in August to 30.4 billion ($38.9 billion)
euros to 30.5 billion euros because of reduced forecasts in Brazil and
Germany. Bernabe said last month he was confident about meeting guidance
this year.

Job Cuts

Telecom Italia said it will cut 4,000 jobs in Italy to help it reduce
costs. On Sept. 19 the company and unions agreed on a plan to eliminate
5,000 positions by 2010 on a voluntary basis, mainly through early

"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," Bernabe said in the statement.

Telecom Italia fell 0.3 percent to 1.039 euros at 9:40 a.m. in Milan,
giving the company a market value of 18.3 billion euros. The stock has
dropped 50 percent in the past year.

"The shares are stuck in the value trap as long as the market remains
skeptical about the company's strategy," Rob Goyens, an analyst at Dexia
Securities, wrote in a Dec. 1 note.

The company forecast a "significant" debt reduction in the period. It
aims to bring borrowings, which stood at 35.8 billion euros at the end
of September, to about 2.3 times earnings before interest, tax,
depreciation and amortization in 2011. The company said the ratio, which
was about 3.1 at the end of 2007, will be about 3 at the end of this year.

Asset Sales

Telecom Italia's debt is rated BBB with a stable outlook by Standard &
Poor's. Moody's Investors Service ranks it Baa2, the second-lowest
investment-grade rating.

Telecom Italia said it plans to raise as much as 3 billion euros by
selling assets. According to slides prepared for Bernabe's presentation
to investors today, the company may consider selling its European
broadband operations; Telecom Italia Sparkle, a provider of
international wholesale voice services and the owner of the
long-distance network; and its stake in Empresa de Telecomunicaciones de
Cuba ETECSA, Cuba's mobile operator.

The company owns TIM Brasil, Brazil's third-largest mobile- phone
company, German broadband company Hansenet, and a stake in the holding
company that controls Telecom Argentina SA. On Aug. 26, it agreed to
sell its French business to Iliad SA.

Italy, Brazil

"Geographically, our growth will come from Italy and Brazil, without
neglecting the Argentinean telecommunications market," Bernabe said in
the statement. "Operations that fall outside these geographic and
business priorities will be managed to enhance their value prior to

Telefonica SA, Mediobanca SpA, Assicurazioni Generali SpA, Intesa
Sanpaolo SpA and the Benetton family control 24.5 percent of Telecom
Italia through holding company Telco SpA.

Telecom Italia CEO Bernabe and Chief Financial Officer Marco Patuano are
holding a presentation in London at 8:30 a.m. local time.

To contact the reporters on this story: Chiara Remondini in Milan at
Last Updated: December 3, 2008 03:42 EST

Related Articles:

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

December 2008
« Nov   Jan »
Please help us to to pay for more powerful servers. Thank you.
Peso Convertible notes
Peso Convertible