Research Update: Telecom Italia SpA Ratings Placed On CreditWatch Positive On Proposed Disposal Of NetCo

Italy-based telecommunications service provider Telecom Italia SpA (TIM) has announced that it has approved the binding offer from Kohlberg Kravis Roberts&Co. L.P. (KKR) for TIM's fixed network infrastructure assets (NetCo). Following the transaction, TIM will reduce the size and scale of its operations, which will weigh on our business risk profile assessment. That said, we understand that TIM will use a significant portion of the proceeds to deleverage its balance sheet. The capital structure that TIM will target following the transaction will likely offset the weaker business risk profile assessment. We therefore placed all our ratings on TIM, including our 'B+' long-term issuer credit rating, on CreditWatch with positive implications. The positive CreditWatch placement reflects the possibility that

... Telecom Italia SpA (TIM) has announced that it has approved the binding offer from Kohlberg Kravis Roberts & Co. L.P. (KKR) for TIM's fixed network infrastructure assets (NetCo). - Following the transaction, TIM will reduce the size and scale of its operations, which will weigh on our business risk profile assessment. That said, we understand that TIM will use a significant portion of the proceeds to deleverage its balance sheet. The capital structure that TIM will target following the transaction will likely offset the weaker business risk profile assessment. - We therefore placed all our ratings on TIM, including our 'B+' long-term issuer credit rating, on CreditWatch with positive implications. - The positive CreditWatch placement reflects the possibility that we may raise our long-term issuer credit rating on TIM by up to two notches if the transaction closes in line with our expectations, which management anticipates will occur in the...

Research Update