At the start of this year, in an effort to revitalise TIM’s lacklustre financial performance, new CEO Pietro Labriola masterminded a plan that would see the Italian incumbent operator’s network arm separated from its service arm.
The new NetCo would comprise the company’s fixed access network as well as its international submarine cable unit…
At the start of this year, in an effort to revitalise TIM’s lacklustre financial performance, new CEO Pietro Labriola masterminded a plan that would see the Italian incumbent operator’s network arm separated from its service arm.
The new NetCo would comprise the company’s fixed access network as well as its international submarine cable unit, Sparkle, leaving ServCo in charge of TIM’s mobile network and enterprise services.
Such a divide has been hotly anticipated by investors, with reports suggesting that various private equity firms – including US-based KKR, which had their €10.8 billion takeover bid rebuffed – have expressed interest in taking a stake in both NetCo and ServCo.
The separation is also expected help smooth the merger of TIM and Open Fiber’s respective fixed networks to create a single national network, with a formal preliminary deal between the two companies being signed back in May.
But despite the excitement surrounding this enormous restructure, more specific details of the plan have been slow to come to light, likely as a result of TIM waiting to see exactly how the merger negotiations with Open Fiber will ultimately play out.
Now, however, a report from Reuters suggests that around 21,000 of TIM’s Italian staff will be shifted to work at the newly created NetCo. With a current domestic workforce of roughly 42,500, this presumably means just over half of the company’s staff will remain to work at ServCo.
That said, the final staff numbers for both units could be considerably less than that. TIM is currently trying to cut costs by €1 billion by 2024, a process that will include significant job cuts. In February, rumours were already circulating that the restructure could see around 8,000 jobs eliminated in Italy alone.
Since then, the first hints of such job cuts are beginning to show, with TIM last month announcing that it would seek to remove around 1,200 jobs through a voluntary early retirement scheme.
A framework for further job cuts has yet to be announced, but an update regarding the future of NetCo, ServCo, Open Fiber, and potential job cuts could be delivered later this week, with TIM’s Capital Market Day taking place on the 7 July. Whether this latest update will provide us with answers or simply more questions, however, remains to be seen.
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