Forget the jab, Telecom Italia is in for some serious surgery. Franco Bernabè, chief executive, on Wednesday ruled out raising capital and instead outlined a plan to cut €2bn in costs and make up to €3bn in disposals by 2011. To boost cash flow and cut its massive debt burden, TI will shed 4,000 jobs on top of 5,000 positions already being eliminated. Non-core businesses, defined as those falling outside Italy and Brazil, will be sold.

Three months ago, a share issue might have been a preferable way to inject cash, but now it would be difficult to secure favourable terms. Also, two of TI’s potential investors – Telefónica, its Spanish rival and biggest shareholder, and a Libyan sovereign wealth fund – have political baggage. Even though it already owns 10 per cent of the company, Telefónica – long mooted as a potential acquirer – has received a hostile reception from Silvio Berlusconi, Italy’s prime minister, who seems intent on keeping control of TI in Italian hands. A passive investment by the Libyans – more palatable to Mr Berlusconi – would have diluted existing shareholders, including Telefónica.