Telecom Italia is looking to cut costs as it faces challenges both at home and overseas, while maintaining its aims for fibre and LTE network build.
Giuseppe Recchi, chairman of the company, said that “efficiency and focus on ever more challenging goals, as long advocated by the board of directors, distinguish the new phase for Telecom Italia starting today”.
This included confirming its targets for fibre reaching 84 per cent of the population (45 per cent at present) and LTE to 98 per cent (92 per cent at present) by 2018.
Newly appointed CEO, Flavio Cattaneo, said “the aim is to reach the end of 2018 with €1.6 billion of efficiencies, compared to the €600 million previously envisaged. This will involve targeted actions amounting to around €800 million on opex and around €800 million on capex”.
Areas targeted for savings include procurement and advertising, IT and network platforms, facilities costs and – unsurprisingly – “the cost of labour”. The company has previously played down reports of significant job cuts.
With regard to Brazil, Cattaneo also promised “a strengthening of the efficiency plans envisaged thus far while maintaining strong development in both 3G and 4G”. This also includes taking into account “major changes to the macroeconomic, political and market context” seen in recent months.
Noting the appointment of Stefano De Angelis last week to head the unit, Cattaneo said that “a strong sign of change is necessary, which started with the appointment of the new CEO”. De Angelis was previously head of TI’s consumer business unit, and was also CEO of Telecom Argentina.
Domestic revenue decreased by 2.3 per cent year-on-year to €3.55 billion, with a decline in fixed services (attributed to voice and wholesale activities) not offset by the flat mobile unit. Its consumer performance was also stronger than business.
For Brazil, revenue decreased 36.5 per cent to €897 million (the organic decline of 15.3 per cent was slightly less startling). The company noted a sales policy less focused on handsets, as well as the impact of the macroeconomic environment on family spending decisions.
On a group level, profit attributable to shareholders of €433 million was up from €82 million, on revenue of €4.4 billion, down 12.1 per cent. The company said the bottom line benefited from “some items of a purely accounting and valuation nature”.