Leverage at Telecom Italia SpA (TIM) will peak at 4.2x in 2019, driven by fierce competition in the domestic market after Iliad's entry last year, and the International Financial Reporting Standard (IFRS) 16 lease adjustment to debt. We expect a cash flow-led decline in leverage of about 0.3x per year thereafter, thanks to reduced capital expenditure (capex), stabilizing domestic operations, positive Brazilian contributions, and efficiency-driven margins. We are affirming our 'BB+/B' ratings on TIM. The stable outlook reflects our expectation that TIM will deleverage materially and sustainably below 4x in 2020, driven by of our assumption of a sharp and sustainable rebound in free operating cash flow (FOCF) to more than €2 billion from 2020, leaving about €1.7 billion for
