Like other telecoms operators in Italy, Wind Tre, which is part of Hong Kong conglomerate CK Hutchinson is grappling with stiff price competition which is eroding revenue and earnings.

In an internal memo to the company's 6,500 staff, Wind Tre's co-CEOs Gianluca Corti and Benoit Hanssen announced a strategic initiative to cut costs and streamline operations, involving a cross-function team.

As part of its effort to reshape its business and focus on services, Wind Tre agreed last year to cede control of its telecoms network unit to Sweden's EQT Infrastructure, in a deal valuing the grid business at 3.4 billion euros ($3.7 billion).

However, the deal is facing hurdles linked to separate existing mobile network partnerships with rivals, which forced the parties to postpone the deadline to complete the sale, sources said in November.

In response to the announcement of the cost-cutting programme, Italian telecoms unions issued a statement to criticise the initiative and called on Wind Tre executives to discuss the state of play on both the grid sale plan and the cost cuts.

Wind Tre declined to comment.

The Italian telecoms sector is going through a shake-out, with market leader Telecom Italia (TIM) planning to sell its network grid to KKR , and Iliad having made a proposal to Vodafone to merge their operations in Italy.

($1 = 0.9152 euros)

(Reporting by Elvira Pollina; Editing by Keith Weir)