The rumor was spreading in Italian telecom market about the incumbent telecom operator Telecom Italia’s planning to cut jobs in an attempt to survive in a highly competitive market. According to the rumor the operator was supposed to cut 15,000 jobs. Telecom Italia has been facing severe competition from the decision of the government to push Enel, the utility company to enter to the broadband market.
Sources in Telecom Italia has reportedly denied it would cut 15,000 jobs in response to increased competition in fiber-optic broadband market from state-backed Enel as new CEO Flavio Cattaneo prepares to address issues at home and abroad.
The new CEO, who took the charge of the Telecom Italia last month is expected to place the company’s strategy in Brazil, where it owns TIM Participacoes, the country’s second-largest operator, high on the priority list. Brazil in the Latin America is one of the fastest growing fiber-optic broadband. If things go well, Telecom Italia could spare some forces in Brazil, but the unit reportedly caused particular discord between former CEO Marco Patuano and the operator’s top shareholder Vivendi, which favours an exit from the country.
At the same time, Telecom Italia is also facing intensified competition at home, which will draw the new CEO’s attention. The threat posed by the entry of Enel is significant for Telecom Italia. Power utility firm Enel, which said last month it will invest €2.5 billion in building a national high-speed fibre network, has thrown up an immediate challenge.
Enel will build fiber optic networks throughout the country and this network will be open to all operators in Italy, potentially cutting into Telecom Italia’s business. This Open-Access network model is getting popular worldwide in which the subscribers would have the benefit of switching between service providers without much hassles. Open access network model by Enel has received vocal backing from Prime Minister Matteo Renzi, who has reportedly grown tired of slow progress in broadband deployment in the country.
There were reports in the market that Enel’s plans could lead to job cuts of almost 30 percent of Telecom Italia’s workforce, and put it at risk of losing almost five million wholesale clients.
the Italian government had given time and options for Telecom Italia to speed up broadband deployment in the country. It was reported from the market that the incumbent operator failed to respond positively to the expectations of the government authorities. Telecom Italia has so far chosen to pursue its own plans to develop a high-speed network in the country.