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Marco Patuano writes to the colleagues of the Telecom Italia Group

11/08/2013 - 07:30 PM

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The letter sent by CEO Marco Patuano to the Group colleagues on 8 November 2013

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Dear colleagues,

as I promised at the convention last 10 October I want to share with you the key elements of our industrial plan presented yesterday to the Board of Directors, and inform you in advance that starting in the next few weeks there will be a series of initiatives to explain the content of the plan in greater detail.

It is an industrial plan that extends our commitment, in terms of investments in new generation networks, datacenters and new services, supported by a strict efficiency plan - alongside the cost reduction programme that has characterised the last few years. A plan for a company that is totally focussed on two main objectives: the relaunch of the Italian market and the growth of the Brazilian market.

Telecom Italia is a major company with a solid foundation that must take control of the revolution that is taking place in our sector, by leading  the digital transformation and accelerating our repositioning process.

Regarding the great social and technological changes that are underway, Telecom Italia has started a renewal process that the industrial plan sums up in three key words that express three tangible assets: Investments, Efficiency, Reorganisation.

For change to happen, we will have to stay true to our primary function, which is to enable people to communicate, but with a decisive change of perspective. We will need to change our focus to the concept of digital life by looking at all our customers: individuals, businesses and public administration. We must be recognised as the principle enabler of a safe and simple modern lifestyle, and propose a single and distinctive offer, composed of converged services and high perceived quality.  We will have to be more reliable, better known and more recognisable. We will have to work on a brand that correctly expresses our new way of proposing ourselves to the market.

The change of mentality needed to make this transition is no longer a matter of choosing from several options, it is a necessity that will require everyone to take informed decisions about our future.

One of the topics most frequently discussed in the company is our network. In June, I explained the reasons that had convinced us to consider the possibility of spinning off our access network. Regarding what we shared with you at that time, the company is now taking the first decisive step: we are prioritising "Equivalence of Input", with functional separation of the access network. Some people consider this an obvious and predictable decision, but it is neither. It is a brave and voluntary choice that I expect will be appreciated and valued by the authorities, as Equivalence of Input is coherent with the EU recommendations, and represents excellence in terms of equality of treatment in the supply of services.

The push to relaunch the company contained in the industrial plan is expressed through the investment programme, which will see approximately 9 billion Euros of investment in Italy (14.4 billion if Brazil is included) over the 2014-2016 three year period. A considerable portion of this is earmarked for the development of innovative assets: well over double the amount allocated in the previous plan.

We will be investing in fixed and mobile ultrabroadband networks, new datacenters, the transformation of technological architectures and the growth of hybrid networks for WiFi, to offer our customers the most advanced digital experience, and make a fundamental contribution to the modernisation of the country.

To support this programme of investments, we must embrace the principle that every Euro saved in efficiency initiatives will be invested in our future. This means we must continue to carefully review and reduce our general, industrial and commercial costs, work to drastically simplify our processes, so as to obtain business units with greater control and operational efficiency.

This transformation process maintains the spirit of the agreement signed with the trade unions last 27 March. An important and courageous agreement, with a very clear shared purpose: to obtain higher productivity to safeguard jobs. The interventions generated by that agreement required a major effort from many of you, but these same interventions have meant that we can guarantee stability for all Telecom Italia employees and have started a process of professional requalification which will equip us with all the skills needed to face the challenge that awaits us.

In the future we will need to be even more efficient, more competitive, more sustainable in the long term. There will be no future without a healthy market sustainability.

As for our operations in South America, we have confirmed our interest in the Brazilian market. Tim Brasil is a strategic asset of the Group. In Brazil, too, we want to grow: it is a country with great potential, a young country that needs the Internet to improve its social and economic conditions. In Brazil, the Internet will primarily be mobile.

From a financial perspective, the plan is supported by a clear-cut programme to strengthen our financials , and allow us to raise a total of over 4 billion Euros, also by identifying assets that can generate more value outside the perimeter of our company. Over 4 billion Euros which will be used to give a powerful impulse to growth in Italy and Brazil.

The challenge that awaits us is not an easy one, but it is absolutely within our grasp. We will overcome all the difficulties, by sharing our goals and the path to achieve them.

I want to thank everyone for the devotion to the company that you demonstrate in all circumstances, particularly in difficult times.

By facing change in the right way, and through innovation, we will successfully build the future of Telecom Italia.

Marco Patuano

Milan, 8 November 2013