Italy-based telecom operator TIM SpA outperformed our EBITDA and free operating cash flow (FOCF) forecast for 2024. This led to better-than-expected adjusted leverage at about 3.5x versus 3.9x in our previous base case for 2024. While we now anticipate improvements in the deleveraging trend with adjusted leverage at about 3.5x and FOCF to debt slightly above 5.0% by 2025, the threshold that we regard as commensurate with a higher rating, the highly competitive nature of the Italian telecom market, and limited track record since the Netco separation constrain rating upside for now. As a result, we affirmed our 'BB' long-term and 'B' short-term issuer credit ratings on TIM, as well as our 'BB' ratings on the group's senior unsecured debt.
