Telecom Italia reviewing work practices - FT

MILAN, March 24 (Reuters) - Telecom Italia (TLIT.MI: Quote, Profile, Research) is embarking on a thorough review of its working practices in an attempt to cut costs, Chief Executive Franco Bernabe told the Financial Times in an interview published on Monday.

Bernabe signalled he would be looking to cut labour costs at Italy's biggest telecoms group as part of a broader rationalisation.

"We are going through a process of redefining the organisation," he said in the interview. "We want a lean organisation, and that means redefining the company's entire micro processes."

He added: "If you 'right size' the organisation, if you make it leaner and simpler, you cut labour costs, real estate costs, organisation costs, all the kinds of overheads that burden our organisation."

Bernabe published a three-year plan this month that sought to draw a line under the turbulence that buffeted Telecom Italia while conglomerate Pirelli & C (PECI.MI: Quote, Profile, Research) was its largest shareholder.

The plan highlights Telecom Italia's limited growth opportunities for the remainder of the decade, partly because Bernabe has ruled out major acquisitions in the near term due to the need to reduce the group's debt position.

Telecom Italia's board also agreed to cut the group's dividend payout and bring it into line with the sector average.

The company's three-year plan, covering 2008 to 2010, is targeting 1.2 billion euros ($1.86 billion) of annual savings in operating expenditure.

Those savings include 700 million euros to be generated through Telecom Italia's alliance with Telefonica (TEF.MC: Quote, Profile, Research), Spain's leading telecoms group. Telefonica is part of a consortium that bought a controlling stake in the Italian company from Pirelli and others last year. (Reporting by Ian Simpson)