Telecom Italia Outlook To Negative As Weaker Revenue Raises Deleveraging Risk

We expect lower revenue and earnings at Telecom Italia (TIM) will cause S&P Global Ratings-adjusted leverage to rise to 4.2x in 2020, outside our trigger for the rating. We anticipate an 11% revenue decline, driven by weaker year-on-year domestic service revenue, roaming, and equipment sales, and adverse currency movements affecting contributions from the Brazil business. Operational stabilization, marked by improved quarter-on-quarter performance in domestic fixed-line, combined with disposal proceeds from agreed transactions, should improve cash flow deleveraging from 2021. That said, market uncertainty creates downside risk to our forecast, and there are potential transactions that have yet to be finalized that add event risk. We are revising the outlook to negative and could lower our ratings if leverage cannot be

...October 6, 2020 - We expect lower revenue and earnings at Telecom Italia (TIM) will cause S&P Global Ratings-adjusted leverage to rise to 4.2x in 2020, outside our trigger for the rating. - We anticipate an 11% revenue decline, driven by weaker year-on-year domestic service revenue, roaming, and equipment sales, and adverse currency movements affecting contributions from the Brazil business. - Operational stabilization, marked by improved quarter-on-quarter performance in domestic fixed-line, combined with disposal proceeds from agreed transactions, should improve cash flow deleveraging from 2021. That said, market uncertainty creates downside risk to our forecast, and there are potential transactions that have yet to be finalized that add event risk. - We are revising the outlook to negative and could lower our ratings if leverage cannot be sustained below 4.2x in 2020, or if we do not expect credit ratios to remain within our rating thresholds from next year on. This includes adjusted...

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