The domestic operations of leading Italian telco, Telecom Italia have strengthened more than we foresaw, thanks to several commercial and investment initiatives and a more benign price environment in the wireless market. However, the group is facing deteriorated market conditions in Brazil, and operating results translated into euros will likely be hit in the next few quarters by the recent Brazilian currency depreciation. We anticipate somewhat higher adjusted debt leverage in our revised base case than we previously anticipated, given the weaker contribution from Brazil and the heavy investment program. We are affirming our 'BB+/B' ratings on Telecom Italia. The stable outlook primarily reflects our expectation that the company will sustain its improved domestic operating performance and maintain positive discretionary
