Telecom Italia details future plans, keeps IT service

The Telecom Italia Group will invest 16 billion euros (US$14 billion) over the next three years in a bid to become Europe’s leading telecom operator, Group Chairman Marco Tronchetti Provera said Thursday.

Approximately 7 billion euros will be earmarked for fixed line network services, with 55 per cent of that sum going on technological innovation and 45 per cent dedicated to maintaining and upgrading existing networks, Tronchetti Provera said while unveiling the Italian carrier’s three-year industrial plan to an audience of financial analysts and journalists in Milan.

The Telecom Italia Group will invest approximately 7 billion euros on mobile network services, 83 per cent of which will be spent on new technologies such as GPRS (General Packet Radio Service) and UMTS (Universal Mobile Telecommunication System) and the rest to be spent on maintaining and upgrading existing networks, the Telecom Italia chairman said. GPRS and UMTS technologies will account for more than 50 per cent of total lines by the end of 2004, he said.

Approximately 700 million euros will be invested on technological research, with Telecom Italia Labs and Pirelli Labs working closely together to exploit synergies, the company said in a prepared statement. A further 1 billion euros will be earmarked for information technology and IP (Internet Protocol) services, it said.

The company expects a 50 per cent annual growth in revenue generated by broadband services to the consumer market and a similar rate of revenue growth from Web services to the business market over the next three years, the statement said.

Telecom Italia Mobile (TIM) SpA’s global expansion strategy will continue to concentrate on Latin America, TIM CEO Marco De Benedetti told reporters. Of the company’s investments, 36 per cent will be in Latin America, as compared to 56 per cent in Italy and 7 per cent in the rest of Europe, De Benedetti said. Latin America, where TIM has a GSM (Global System for Mobile communications) presence in Brazil, Bolivia, Chile, Peru and Venezuela, is expected to see the fastest rate of growth, with new lines being activated at an average annual rate of 52 per cent, he said. TIM’s objective is to reach 12 million active lines on the continent by the end of 2004, as compared to the current figure of 2.8 million, Telecom Italia said.

Telecom Italia’s management intends to reduce Group debt from 25 billion euros as of June 2001 to less than 15 billion euros by the end of 2004, the company said. A program of asset sales announced in November has already generated divestments worth a total of 3.5 billion euros. The latest deals, announced Thursday, were the sale to Bouygues SA of TIM’s 19.6 per cent stake in BDT SA, the company that controls France’s Bouygues Telecom SA, for 750 million euros, and an agreement with News Corp. and Vivendi Universal/Canal+ to sell 50 per cent of Telecom Italia’s interest in the Italian satellite broadcaster Stream SpA for 47 million euros, the company statement said.

Telecom Italia will not be selling any assets in the information technology sector, as had previously been rumoured. IT Telecom SpA, the company controlling Group IT activities, has a 20 per cent share of Italy’s software and IT services market and had a revenue in excess of 2 billion euros in 2000, the company said. “Information technology is an important asset for our Group that we want to develop, so we don’t intend to sell anything,” Tronchetti Provera told the Milan analysts.

Preliminary Group results for 2001 showed consolidated revenue of 30.8 billion euros, up 13.2 per cent on the previous year, the company said. The Group expects a net consolidated loss for the year, as a result of significant write-downs in the course of 2001, the Telecom Italia statement said. “The significant reserves available mean that for 2001 there should be no change to dividend distribution policy compared to the previous year,” it said.

Telecom Italia can be contacted in Rome on tel. +3906 3688 2066 or on the Web at