Telecom Italia tries to cut debt

But the E4bn bond sale won't even make a dent in it ...

Telecom Italia's holding company Olivetti is to issue up to E4bn (£2.5bn) in convertible, zero-coupon bonds in a move to reduce the costs of its E17.4bn (£10.9bn) debt. The bond sale will be announced today by Marco Tronchetti Provera, the chairman of tyre-maker Pirelli and the man who led the takeover of Telecom Italia two months ago. According to the Financial Times, however, the sale will simply lower the financing costs of the debt, which are draining large amounts of cash from Telecom Italia and its mobile phone division, TIM. Tronchetti Provera is also expected to outline further financial moves and strategic plans for Telecom Italia and TIM. Olivetti is expected to sell several investments, worth about E800m, over the next year, starting with the television station La Sette. When Pirelli and the Benetton family bought a controlling stake in Olivetti in July, they hoped to raise up to E5bn (£3.1bn) in cash, but since then the company's share price has plummeted by 60 per cent because of the downturn in the telecommunications sector.