Wind Tre at loggerheads with unions over network spinoff

Wind Tre faces industrial action over its plan to spin off its mobile network and sell a majority stake in the new company to Sweden’s EQT.

The Italian telco this week held its latest meeting with union and government representatives aimed at resolving their differences over the proposed restructuring. However, the talks ended without resolution, according to a statement published by Fistel CISL. The other major unions were also present.

It’s not wholly clear exactly what that means for Wind Tre in the immediate future, but given that the meeting was slated as a conciliation attempt linked to Italian law on the right to strike in essential public services, it’s pretty obvious what the end result could be.

Documentation from the unions confirms the rumours that emerged a month ago regarding the network spinoff plan and provides additional detail.

Back then the details were scant, but now we know that, as it told the unions, Wind Tre plans to separate its mobile network from the operational side of the business and sell a 60% stake in it to private equity firm EQT, with its existing parent company CK Hutchison retaining 40%. The move would see between 2,000 and 2,200 staff transferred to the new unit, including all network personnel, support staff, and IT OSS staff.

The whole process would take between six and nine months, Wind Tre told the trade unions.

Essentially, the new company would operate as a wholesale business, leaving Wind Tre the operating company with its licences, sales and marketing functions, and the BSS element, all served by around 4,000 employees. The spinoff would come alongside an acceleration of the company’s diversification strategy, according to unions Fistel, CISL, SLC CGIL and UILCOM; in addition to strengthening its existing business, Wind Tre will look to adjacent sectors like energy, insurance and security, in both the consumer and business markets, for growth.

That sort of strategy is hardly unprecedented or unusual for a telecoms operator. However, the unions are claiming just that; that it is not how things have been done to date in Italy. They are keen to stick with the integrated telco model – there is also much heated debated ongoing over TIM’s plan to sell its network assets – insisting that network separation is a short-termist move designed purely to look good on the balance sheet.

The Wind Tre plan is, in the unions’ words, “a technological impoverishment of the country’s second-largest telephone operator, that also has probable repercussions in the area of employment.”

Their concern is mainly for the Wind Tre opco.

“A company of about 4,000 people focused only on the sale of connectivity in a hyper-competitive market will soon have problems maintaining employment,” they point out.

However, they are also against the inclusion of an investment firm like EQT in the project, whose remit is to generate returns, which in itself could threaten jobs, they say.

The unions note that they are “fully aware” of the difficulties faced by the overall telecoms sector, but nonetheless insist they cannot back the choices being made by telecoms operators, which they claim will only make things worse, especially from an employment perspective.

“Wind Tre’s project is wrong and we will fight it with all the means at our disposal.” they said.

That was at the end of March. Two weeks on, and clearly little progress has been made between the two sides. That’s hardly surprising, given their diametrically opposed views: Wind Tre believes the key to its future is in structural separation, while the unions have made it clear that they support the idea of vertical integration and no other approach.

This is a problem that will not be solved easily.

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