Unions playing an increasing role in European telecoms

Labour unions have once again become pivotal players in the European telecoms sector, involving themselves in M&A and downsizing plans.

Most of the headlines are coming from Italy, where strike action is on the cards as incumbent operator TIM mulls the €10 billion-plus takeover offer it received from private equity firm KKR just under a fortnight ago.

Four of Italy’s telecoms unions – SLC Cgil, Fistel Cisl, UILCOM UIL, and Ugl Telecomunicazioni – this week issued a statement to confirm they have held a meeting with senator and Lega party leader Matteo Salvini in which they presented their case on TIM’s future, in particular for its employees. A group of unions expressing concerns on employment is hardly newsworthy in and of itself, but the announcement also served to indicate how big and contentious an issue the potential TIM takeover is proving to be in Italy.

It came shortly after UILCOM UIL (the Italian union of communications workers) revealed it had met with Enrico Letta, leader of the country’s Democratic Party (PD), which is part of the current ruling coalition. The outcome was much the same, in that the union expressed its dissatisfaction with the way TIM has been run since privatisation and its concerns over staffing levels, but in this case there was an added extra: Letta indicated that the government will take an active role in TIM’s future direction. We had suspected as much, but it’s interesting nonetheless.

“We are pleased that Secretary Letta told us that the government cannot be a spectator this time but will be a fundamental participant, and that in the next few days the PD will demonstrate the key importance of the country’s main telecommunications company and the requirement for the situation to be constantly monitored in the interest of common objectives,” UILCOM UIL said, in a statement. Those common goals are to maintain employment and secure national strategic infrastructures, the union explained.

But the unions are not relying solely on meeting with politicians. According to Reuters, strike action is on the cards.

The newswire says it has seen a document in which the unions indicate they will not accept any reorganisation at TIM that threatens the jobs of any of its 42,500 domestic staff, a comment that tallies with the statements issued this week. However, it also quoted SLC Cgil union official Riccardo Saccone as saying, “we want to be involved in any decision concerning an overhaul of the group,” and indicating that the unions could call a strike at TIM within 10 days.

We’re not at the group overhaul stage yet. The TIM board and the Italian government – its second largest shareholder through state-owned lender Cassa Depositi e Prestiti (CDP), as well as having a golden power over the operator as a strategic national asset – have yet to formulate their response to KKR, and that response, from the government’s side at least, will depend very much on the investment firm’s plans for the network.

The government is surely now under no illusions about where the unions stand though. Strike action would doubtless cause some problems for the telco.

It’s not just in Italy where the unions are getting involved in telecoms.

The Guardian on Thursday reported that Prospect, one of the biggest unions representing BT staff, has contacted UK business secretary Kwasi Kwarteng in a bid to take sure any takeover would not impact on jobs.

It’s a timely move, coming just days before the expiry of a standstill agreement that prevents Altice founder Patrick Drahi from increasing the 12.1% stake in BT he acquired in June. Whether Drahi is actually planning to make a move for BT on 11 December is anyone’s guess, but the fact is that he could, and the unions are clearly worried about it.

“The business secretary must take personal charge of making sure that any proposed takeover supports growing that investment, not a flight of money or skills overseas. We need a clear focus on protecting both our national interests and jobs while boosting private sector research and development (R&D), all of which could be at risk with a controversial takeover,” the paper quoted Mike Clancy, the general secretary of Prospect, as saying. Amongst other things, Clancy also indicated that speculation over BT’s future will unsettle BT staff in the run-up to Christmas.

There are probably a fair few unsettled staff at Telefonica this week too. Spain’s General Workers Union told Reuters that the telco plans to offer a voluntary redundancy package to several thousand staff born in 1967 or earlier and with at least 15 years of employment at the firm. The union has its doubts about uptake, given that the conditions of the proposed package are less attractive than previous early retirement-type offers, but nonetheless, there are doubtless a number of Telefonica staff out there doing some serious thinking about their future.

All of which serves to illustrate the interesting times Europe’s incumbents are living through at present. The heavy union involvement makes this feel like an issue from some time ago, but it’s very happening today.