Italy’s Telecom Italia has announced plans to cut costs by around Eur2bn in 2009, as well as offload non core assets to the tune of a further Eur3bn. Part of the restructuring plan includes the slashing of a further 4,000 jobs in Italy.

Under the Italian operator’s 2009-2011 plan, 40 per cent of the targeted cost efficiencies will be achieved in 2009, through network operations, building and energy simplifications; sales and distribution and customer operations programmes; and general organisation streamlining.

Non core assets, which fall outside the scope of the business plan, will be offloaded to contribute a further Eur3bn in cash flow.

At an event in London on Wednesday, Telecom Italia CEO Franco Bernabe, said: “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. In the light of our results, which in the meantime have shown a slow down in margin erosion, we are now in a position to move forward with this three-year plan confirming the path we went through in recent months.

We will strive even harder to keep operating costs and investments in check, maintain a business with a scope that matches our current needs, and pursue our target of bringing down debt to around 2.3 times our EBITDA.”

Bernabe said future growth is expected to come from Italy and Brazil, and to a lesser degree, from Argentina.

In its domestic market, the carrier plans to drive growth in revenues from broadband, which it expects to account for 28 per cent of overall domestic revenues by 2011. The approach will be customer centric, with a focus on Quality of Service, Value Added Services, the development of IPTV, online advertising and digital home services, as well as the development of mobile broadband.

The group’s brand will also be revised to promote this customer centric approach as well as the company’s more convergent offerings.

In Brazil, the company intends to exploit the opportunities arising from fixed to mobile substitution, as well as using mobile as a broadband growth enabler. Telecom Italia forecasts more than 2.5 million mobile broadband customers by 2011, and an estimated market share in this sector of around 25 per cent.

In Argentina, TIM intends to expand its presence by exercising a call option to increase its shareholding in Sofora. This will be undertaken with the support of a local partner and will not require Telecom Italia to make any financial investment, the company said.

“Geographically, our growth will come from Italy and Brazil, without neglecting the Argentinean telecommunications market. Our business plan focuses on new services and enabling functions over fixed-line and mobile broadband. On the domestic market, our focus is on a new customer-centric approach, which is why we will be launching a new macro-organization starting from January 2009. We will continue to boost innovative businesses, as we work to promote wide-ranging development of the digital economy. We will also be updating and significantly rationalizing our brand architecture in 2009 to offer increased support for our range of convergent services,” said Bernabe.