Lunedì, 15 Ottobre 2018

Downgrade adds to Telecom Italia's problems


(by Emily Backus)
Rome, August 5 - Fitch said Monday that it has cut
Telecom Italia's Long-term Issuer Default Rating (IDR) to 'BBB-'
from 'BBB', with a negative outlook, adding to a host of
problems now facing Italy's biggest telephone company.
The ratings agency said the "downgrade reflects the
worsening operating conditions in TI's domestic business due to
regulatory pressure, a continued mobile price war and a weak
economic environment".
Domestic business deteriorating TI's H113 results and full
year domestic guidance were weaker than Fitch expected.
TI's revenue and EBITDA trends in 2013 are likely to be
worse than that reported in 2012.
The mobile price war in Italy is showing no signs of
abating and the effects of a weak Italian economy could to
persist into 2014, Fitch said.
Increasing pressures in the domestic business, TI's main
generator of cash flow, means visibility is worsening.
Management has shown in the past it has been able to deal
with regulatory and competitive pressures to prevent TI's credit
metrics deteriorating.
The Negative Outlook reflects Fitch's concerns that TI's
financial cushion to deal with future adverse shocks to the
business has been reduced.
The former State monopoly saw its shares creep down on
Monday 1.24% on the Milan bourse to 0.48 per share - one of its
lowest levels in 16 years.
The rating downgrade also follows news that the company's
rival Vodafone Italia has filed a civil lawsuit seeking more
than one billion euros in damages for TI's alleged abuse of its
dominant position on the fixed-line telephone network in Italy.
The lawsuit came after the Italian antitrust authority in
May fined TI 103 million euros on similar charges.
TI has appealed the antitrust ruling and rebuffed
Vodafone's accusations, saying the company is confident it will
"succeed in demonstrating the absolute correctness of its own
TI on Friday reported first semester losses of 1.4 billion
euros and issued a profit warning for the year.
The company said results were affected by 2.2 billion euros
in goodwill writedowns.
TI has also suffered uncertainty over its plans to separate
its fixed-line network from its other businesses, although on
July 25, Italy's telecommunications regulator Agcom on issued a
preliminary approval of the plan.
Agcom's communications guarantees board said the spin-off
plan ''answers to the requisites'' outlined by European
telecommunications regulators.
Trading in Telecom Italia suspended on the Milan bourse on
July 31 after press rumours of a possible capital increase sent
shares plummeting nearly 5%.
Chief Executive Franco Bernabe' denied the report, saying a
capital increase was not, in fact, on the TI board's agenda.

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