Telecom Italia axes jobs to escape Olivetti bid

Thousands of jobs at Telecom Italia look in jeapardy today following reports that the telco plans to axe up to a third of its workforce.

The telco confirmed to Silicon.com that it is in negotiations with Italian unions to rationalise its 124,000 staff, but it has so far refused to comment on claims in the Financial Times that up to 40,000 jobs could go.

"Nothing has been decided," a company spokeswoman said. "We are having talks with trade unions to find ways to rationalise the workforce, but we are trying to avoid drastic measures."

The company is currently fighting off a potential hostile takeover from Olivetti and the job cuts are believed to be among a series of measures to keep the Italian IT giant at arms length. Other moves include the absorption of Telecom Italia Mobile and the cutting of pre-tax costs by L1000bn (E516m).

David Brown, founding chairman of telecoms research consultancy Schema, thinks job cuts are inevitable for Telecom Italia, and they will soon be followed by rationalisations in other incumbent European PTTs.

He said Telecom Italia's hand had probably been forced by the Olivetti bid. "This is really a model for what all the big European PTTs are going to have to do. The Olivetti bid definitely speeded up the process for Telecom Italia and although it may be enough to fend of Olivetti - it may be too late to save the company from a stronger acquisitor," he said.

Although Telecom Italia is heavily unionised, Brown does not necessarily think redundancies will be fought to the last man. "It depends greatly how the unions are motivated," he said. "Historically they have been difficult in disputes like this. But unless these traditional PTTs adopt leaner staffing strategies, they will run into trouble. Many unions are recognising this, so it may not be a fight to the death."