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It’s the right time to invest: Telecom Italia CEO

Reporting by Julia Chatterley, writing by Jessica Hartogs
Telecom Italia disappoints investors

Telecom Italia's CEO has addressed criticisms about the company's newly released investment plan, including increasing expenditure (capex) while so heavily indebted.

"We have decided to invest more because the signals coming from the market are very exciting, Marco Patuano told CNBC in an interview that aired on Wednesday.

The investment will be, among other things, in the group's 4G mobile network.

"The difference between a good 4G and not such good 4G is really crucial in order to move the competition away from prices. The competition will have to be on quality. And quality means basically better quality of the data network," Patuano told CNBC.

"It's the right time. So we have to accelerate," Patuano added.

Marc Hill | Bloomberg | Getty Images

Telecom Italia's plans to step up its spending on building out faster fixed and mobile networks in its home market over the next three years, have been met with some concern.

Outlining its investment plan to 2018, the company said on Tuesday it would spend 12 billion euros ($13.4 billion) over the three years in Italy, including 3.6 billion to lay fiber optic cables.

"I think that in such volatile markets, when you go there and you say: I'm going to do more capex, you need a bit of time to go through the model and to digest if it is a good idea or not," Patuano said of the concerns.

"One year ago, everyone would say: I will do more capex - it could have been good or bad but it was something that the market generally speaking was liking. Today the market is much more selective and I think they need a bit of time to really digest the numbers and the figures and so on."

Patuano told CNBC that the company had asset disposals in their investment plan.

"We have to complete the exit from Argentina which is decided, so we are not changing our mind," said Patuano. The group could find further assets to sell if it needed the cash, he said.

Reuters reported Tuesday that the Italian telecoms company was targeting early voluntary redundancies for around 3,300 workers in Italy and aimed to cut an additional 250 staff as it seeks to cut costs.

Between 2016-18, the company will also use solidarity contracts, under which employees work less but are also paid less. Those contracts will be used to avoid the equivalent of 2,600 layoffs, the agency said.

The company released disappointing full-year earnings before interest, tax, depreciation and amortization of 7 billion euros (7.81 billion USD), down 20.3 percent from the previous financial year.

Reuters contributed to this story.

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