Telecom Italia Turns its Focus to the Internet

Telecom Italia Thursday released the guidelines that will restructure the former telecom
monopoly, including plans to cut noncore assets and focus on Internet services.

The company’s reorganization will rely on the telecom’s successful mobile
phone unit, Telecom Italian Mobile (TIM). It will take advantage of its
mobile phone user base by building up its WAP services, offering
phone-based Internet access and creating a specific portal for TIM.

Internet penetration in the country is low compared to the economic
development of the country, according to the telecom. However, Italy’s
mobile phone use rate is at one of the highest in Europe.

The online strategy also includes integration of its Stream cable TV unit
and Internet content, as well as a set-top box access package.

The new guidelines also outline plans to start a free Internet service and
a consumer portal.

In addition to its focus on new technologies, the telecom will also develop
a Web-based application hosting system for large businesses and create
packages to encourage use of Net-based messaging services.

“The group is already present in all segments and intends to play a
decisive role in the development of the Internet in Italy,” the guidelines
said.

Telecom Italia will also enter the ADSL and broadband markets. Backbone
development plans are in the works, including a pan-European voice-data
network and IP connection development in Europe and the U.S. The company
said it intends to move “from a voice network compatible with data to a
data network compatible with voice.”

Telecom Italia also intends to create a private university to produce
professionals for the Information and Communication Technology (ICT)
sector. The company will also develop a “school portal” to encourage
educational use of the Internet.

Telecom Italia plans to use the resources from its noncore unit sell-off to
support international expansion in Central Europe, Latin America, and the
Mediterranean Basin.

As with several other former telecom monopolies in Europe, the company is
considering the option of spinning off the Internet unit once its services
are built and consolidated.

After a brutal tug-of-war between a friendly merger bid from Deutche Telekom and a hostile one from Olivetti, the latter prevailed in June
and completed a $65 billion takeover of Telecom Italia. The new guidelines
represent the first major move since the acquisition.

Telecom Italia chairman and CEO Roberto Colaninno Thursday will meet with
the trade unions in Rome to further explain the new guidelines. A
multi-year plan will be submitted to the company’s board in December.

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