Telecom Italia does four-way split

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ROME -- Telecom Italia finished off 2006 by announcing its long-awaited restructuring plan, saying it will split the company into four parts that will all report to chief executive Riccardo Ruggiero.

Friday's announcement ended rumors that the company could be headed for its second significant management shakeup since September. It also reiterated the company's plan to become a bigger player in the media sector.

The former Italian state telephone monopoly landed in the headlines in September when former CEO and chairman Marco Tronchetti Provera announced the company would sell off its profitable mobile phone unit, TIM, and shift its focus to developing media content for the company's broadband Internet unit.

Tronchetti Provera was subsequently forced out of the company and replaced as CEO by Ruggiero and as chairman by former Sen. Guido Rossi. The new leadership said they would reverse plans to sell TIM but that the increased focus on producing media content would remain.

The plans released Friday confirm that, indicating that the company will be split into four units focusing on fixed-line telephony, mobile telephony, broadband Internet and media content.

In November, Ruggiero clashed with Telecom Italia's board of directors over the fate of Telecom Italia-Brasil, the cellular phone subsidiary that is the company's largest foreign holding. Board members wanted to sell the profitable unit in order to pay down debt while Ruggiero wanted to keep it. The disagreement sparked rumors that Ruggiero could be forced out or reduced to heading one of the four subsidiaries.

But the plan announced Friday ended that speculation by confirming that Ruggiero will stay on board and that the heads of the newly formed units will report directly to him.

But there could still be more drama involving the company in 2007. Ruggiero's contract expires early in the year and Friday's announcement said that a new contract was still being negotiated.
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