Telecom Italia (TI) wants to embark on a wide-ranging cost cutting strategy to reduce domestic operating expenditure by up to 40 percent within the next seven years. In an interview with the Financial Times, TI chief executive Franco Bernabe says radical cost cuts are needed to boost the company’s profitability, as the operator is not expecting significant revenue growth in the next three years. “We need to rethink globally our cost structure,” Bernabe told the publication. “In the long-term a company like ours has to decrease the cost structure by 40 percent.”

TI’s operating costs for its fixed-line and mobile networks in Italy currently average €2 billion (US$3.1 billion) per year. Bernabe says he aims to cut this by 40 percent by 2015, in part by investing in optical fibre infrastructure that would require less maintenance while providing higher service quality. The executive aims for similar cuts across its customer service, advertising and marketing efforts. Bernabe also said he is in talks with private-equity partners to co-finance international deals. This would potentially help Italy’s largest telecoms company expand its overseas operations through smaller joint-ventures in emerging markets, avoiding major acquisitions. According to the report, TI’s share price has fared worse than other European incumbent telcos this year, falling almost 35 percent.