Telecom Italia Said to Weigh 15,000 Job Cuts on Enel Plan

  • Phone carrier mulling response to Enel's rival fiber network
  • Italy's Renzi to unveil details of utility's plan Thursday

Telecom Italia SpA, Italy’s biggest phone company, is considering about 15,000 job cuts in response to competition from a state-controlled power utility that’s planning a fiber-optic broadband network, people familiar with the matter said.

The move, amounting to almost 30 percent of the phone carrier’s Italian workforce, follows the March 23 announcement that Enel SpA will spend 2.5 billion euros ($2.9 billion) on a network it will open to Telecom Italia’s competitors, said the people, who asked not to be identified because the talks are private. The Enel network will make it easier for Telecom Italia rivals to provide faster Web access, potentially cutting into the carrier’s business, they said.

Publicity from potential job losses could serve a secondary purpose for Telecom Italia, drawing attention to a plan the carrier considers to be unfair competition -- and perhaps slowing it down. Enel’s biggest investor is Italy’s Economy Ministry with about a 24 percent stake, making the government, headed by Prime Minister Matteo Renzi a partner in the venture that may cause pain for workers at the former state phone monopoly.

“If Telecom Italia responds to Enel’s plan with 15,000 job cuts, the blame
will be on Renzi,” Michele Azzola, national secretary of the SLC-Cgil telecommunications workers union, said in an interview. “During the last year, Italy’s premier lost any interest in the country’s largest phone carrier.”

The episode is a “potential bloodbath” the government could have avoided by putting money into Telecom Italia instead of favoring a state-owned company operating in a different industry, Azzola said.

Renzi is scheduled to hold a news conference tomorrow at noon local time in Rome on broadband in Italy, according to a statement from his office. Representatives there declined to comment on Telecom Italia’s plans.

Demand for faster Internet access is soaring as consumers watch more movies, TV shows and live sporting events online. Italy, where Telecom Italia is still by far the biggest player, lags behind other major European countries on its deployment, and Rienzi has grown impatient with the lack of progress.

Enel will use infrastructure such as transmission towers and electricity cabinets to host fiber-optic cables. Telecom Italia risks losing about 5 million wholesale clients, most of whom are from Vodafone Plc’s Italian unit and Wind Telecomunicazioni SpA, according to the people.

A Telecom Italia representative declined to comment on the issue. Enel CEO Francesco Starace has said previously that Telecom Italia was welcome to join his company’s project.

Telecom Italia shares ended little changed at 86 euro cents in Milan, giving the company a market value of 15.8 billion euros.

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