Telecom Italia CEO Marco Patuano has reportedly been so impressed by AT&T's ability to transform its business in recent years that he has sought advice from the U.S. company's CEO, Randall Stephenson, on how to change the fortunes of the struggling Italian operator.
Bloomberg reported that Patuano met Stephenson during a U.S. trip to meet various telecoms executives last month. In an interview last week, the Italian CEO told the news agency that he regarded AT&T as an "excellent turnaround case study", and was interested to learn more about how it transformed its business in the face of growing competition from the likes of Verizon.
Telecom Italia has been struggling for some time with falling revenue and profits, and had its debt cut to junk status by Standard & Poor's and Moody's Investors Service last year. The company reported total net debt of €27.9 billion ($38 billion) at the end of 2013.
Bloomberg noted that Patuano, who took over the CEO role from Franco Bernabe in October last year, is particularly interested in how Stephenson has improved AT&T's competitiveness through high-speed data offerings combined with TV and video offerings. Like many European operators, Telecom Italia is seeking new ways to generate revenue as traditional areas such as voice and text services become commoditised.
In November last year, Patuano unveiled a new plan to invest €3.4 billion in next-generation networks, cloud computing and LTE and raise funds of around €4 billion. So far he has sold Telecom Italia's headquarters in Milan and its Argentine business, and scrapped dividends to help stabilise the operator's finances.
The Italian operator, which competes on the mobile market with Vodafone Italy, VimpelCom's Wind, and Hutchison Whampoa's 3 Italy, has also considered and dropped plans to sell its wireline network. Furthermore, it has considered and dropped potential partners for its mobile business, including Hutchison Whampoa. Indeed, AT&T is also a former suitor as it held talks on buying a stake in Telecom Italia in 2007, but backed down over political opposition.
Telecom Italia has also fallen foul of its own minority shareholders and Brazilian anti-trust authorities: the move by Spanish operator Telefónica to increase control of Telco, which holds a 22.4 per cent stake in Telecom Italia, has raised concerns that the Italian operator will be forced to sell its Tim Brasil unit because Telefónica also competes on this market through Vivo. Patuano has consistently reiterated that Tim Brasil is a strategic unit and is not for sale, however.
For more:
- see this Bloomberg article
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