Telecom Italia New CEO Hopes to Cut Debt

The plan is the first by management installed in November, a month after Spain's Telefonica and a group of Italian banks took over Italy's largest telecommunications company. It calls for revenue growth of 1 percent to 2 percent a year through 2010.

CEO Franco Bernabe, who led the company in 1998, said the company's debt of $55 billion constrained him from making more exciting moves. He said he saw little room for selling other assets.

Telecom Italia has cut its dividend by nearly a half to 12 cents per share, which Bernabe said was more in line with industry standards. While the move has disappointed investors, Bernabe said he expects it will improve over time.

Analyst Carlo Alberto Carnevale Maffe, a professor at Milan's Bocconi University, said the most important development is the shift in strategy from a technology to customer-based organization. For Telecom Italia, it means that instead of focusing on fixed line versus mobile, it will offer services based on whether customers are retail, businesses or large companies.

Telecommunications companies in general face increased competition as fixed line mobile convergence has opened up a scramble for new business with software, hardware and even media companies.

Bernabe said the company's growth will focus on the Italian market, where it remains the dominant telecommunications company and is its largest market, while consolidating its presence in Brazil, Germany and Argentina and looking for ways to increase efficiencies.