Telecom Italia details future plans

The Telecom Italia Group announced it will invest €16bn (£9.8bn) over the next three years in a bid to become Europe's...

The Telecom Italia Group announced it will invest €16bn (£9.8bn) over the next three years in a bid to become Europe's leading telecom operator, group chairman Marco Tronchetti Provera.

Approximately €7bn (£4.3bn) will be earmarked for fixed line network services, with 55% going on technological innovation and 45% dedicated to maintaining and upgrading existing networks, Tronchetti Provera said.

The Telecom Italia Group will invest approximately €7bn on mobile network services, 83% of which will be spent on new technologies such as GPRS and Universal Mobile Telecommunication System (UMTS) 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% of total lines by the end of 2004, he said.

Approximately €700m (£427m) 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 €1bn (£0.61bn)euros will be earmarked for information technology and IP services, it said.

The company expects a 50% 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 chief executive officer Marco De Benedetti told reporters. Of the company's investments, 36% will be in Latin America, as compared to 56% in Italy and 7% in the rest of Europe, De Benedetti said. Latin America, where TIM has a GSM 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%, 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 €25bn (£15bn) as of June 2001 to less than €15bn (£9.1bn) by the end of 2004, the company said. A program of asset sales announced in November has already generated divestments worth a total of €3.5bn. The company also announced the sale to Bouygues SA of TIM's 19.6% stake in BDT SA, the company that controls France's Bouygues Telecom SA, for €750m (£457m), and an agreement with News and Vivendi Universal/Canal+ to sell 50% of Telecom Italia's interest in the Italian satellite broadcaster Stream SpA for €47m (£28.7m), the company statement said.

Telecom Italia will not be selling any assets in the information technology sector, as had previously been rumored. IT Telecom SpA, the company controlling Group IT activities, has a 20% share of Italy's software and IT services market and had a revenue in excess of €2bn 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 said.

Preliminary Group results for 2001 showed a consolidated revenue of €30.8bn (£18.8bn), up 13.2% 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.

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