Moody's Cuts Telecom Italia (TI) to Junk Status
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Moody's Investors Service has downgraded the ratings of all debts issued (or guaranteed) by Telecom Italia S.p.A. (NYSE: TI), and all supported debts within its family of issuers, including the senior unsecured ratings to Ba1/(P)Ba1 from Baa3/(P)Baa3 and the junior subordinated ratings to Ba3 from Ba2.
The rating action follows the company's failure to strengthen its balance sheet and the accompanying announcement on 3 October of the resignation of its Chairman and CEO, Mr. Bernabe.
"We are downgrading Telecom Italia's ratings primarily because the recent resignation of the CEO has increased uncertainty regarding the company's ability to strengthen its balance sheet sufficiently to mitigate the declining trend in its domestic revenues and EBITDA," says Carlos Winzer, a Moody's Senior Vice President and lead analyst for Telecom Italia.
As part of today's rating action, the rating agency has assigned a Ba1 corporate family rating to Telecom Italia, in line with Moody's policy for non-investment-grade ratings. Concurrently, Moody's has assigned a Ba1-PD probability of default rating (PDR) to the company. The outlook on the ratings is negative.
The rating action concludes the review for downgrade initiated by Moody's on 8 August 2013.
A full list of affected ratings is provided towards the end of this press release.
RATINGS RATIONALE
Telecom Italia's ratings were placed on review for downgrade on 8 August, driven primarily by the deterioration in its domestic revenues and EBITDA resulting from the worsening economy, higher unemployment, adverse regulatory effects and more intense competition in Italy. The review was also driven by Telecom Italia's inability to meet its domestic and group EBITDA targets, with a high likelihood of a downgrade if the company failed to meet ambitious plans to reduce debt and improve financial metrics by year-end 2013.
Today's rating action reflects the resignation of Telecom Italia's CEO, which in Moody's view reflects a lack of support from shareholders for a material capital increase to strengthen the company's balance sheet. As a result, an improvement in Telecom Italia's credit quality no longer appears likely. The remaining options available to strengthen the credit, whether related to capital or operating plans, regulation, financial strategy or asset sales, will take time to implement, even if successful. There will be uncertainty and implementation risk until the new CEO has appraised its options, set out and started to deliver on a new strategy, and this is reflected in the negative outlook.
In Moody's view, there is increased uncertainty regarding the company's strategy and ability to reverse the declining trend in its domestic revenues and EBITDA. This deterioration is a result of the continued weakening of Italy's economy, higher unemployment, adverse regulatory effects and more intense competition in the country. Moreover, the downgrade reflects Moody's expectation that Telecom Italia's domestic revenues and EBITDA will deteriorate further and that the company will fail to meet its domestic and group EBITDA targets for 2013.
Telecom Italia's business risk has increased as a result of the expected further deterioration in the company's operating performance, as well as the low visibility regarding when management might be able to reverse the declining trend.
As a result, Telecom Italia is likely to struggle to achieve its reported net financial position target of less than EUR27 billion by year end.
In particular, Moody's notes that management is struggling to offset the negative effect on the group of the tougher-than-expected operating conditions for its domestic mobile business in 2013. This business has experienced intensified competitive pressure and adverse regulation.
Moody's expects operating conditions in Italy to remain challenging for some time, and recognises the limited options that Telecom Italia has to strengthen its balance sheet. Major shareholders appear opposed to a material capital increase and could prefer Telecom Italia to strengthen its balance sheet in combination with carrying out an effective restructuring of its domestic operations. Some of these measures will take time to implement and imply substantial execution risk.
Therefore, management may find it difficult to meet its deleveraging commitment of a reported net financial position/EBITDA of below 2.0x in the next 24 months.
Moody's considers that Telecom Italia's Ba1 rating is supported by the company's (1) scale; (2) integrated telecoms business model, with strong market positions in both the fixed and mobile segments; (3) geographical diversification, mainly as a result of its presence in Brazil and Argentina; (4) continued commitment to debt reduction and financial discipline; and (5) high operating margins, ongoing operational expenditure (opex) reductions and strong liquidity. The Ba1 rating also factors in the deterioration in Telecom Italia's operating performance, including an expected further decline in EBITDA this year, and the challenges management is facing to offset the higher business risk with a stronger financial profile.
Moody's considers Telecom Italia's liquidity to be adequate, based on the company's free cash flow generation, available cash resources and committed credit lines, as well as an extended debt maturity profile. Telecom Italia's debt maturities are fairly evenly spread out and back-loaded, with more than 50% of liabilities due beyond 2016.
Moody's acknowledges the company's currently ample access to liquidity due to its current cash position of more than EUR7.1 billion (after the recent bond issue of EUR1 billion on 19 September 2013) and around EUR6.7 billion in available bank funding (EUR6.5 billion of long-term credit facilities), which support its debt maturities through 2015. In addition, Moody's takes comfort from Telecom Italia's diversified sources of funding, including signed EUR4 billion and EUR3 billion forward start facilities maturing May 2017 and March 2018 respectively, as well as from the fact that a significant portion of its committed lines are with international banks.
Moody's has now removed the equity credit assigned to the EUR750 million of hybrid bonds issued by Telecom Italia in March of this year. This follows the publication of Moody's methodology for assigning equity credit to hybrid bonds issued by speculative-grade non-financial companies (Debt and Equity Treatment for Hybrid Instruments of Speculative-Grade Non-financial Companies, published in July 2013).
The negative outlook reflects Moody's expectation that Telecom Italia will continue to face substantial challenges in 2013 and 2014, including management transition, the ongoing recession in Italy, adverse regulation and rising levels of competition, all of which have served to erode the company's domestic revenues and EBITDA. In addition, Moody's questions the extent to which Telecom Italia will be able to meet its commitments to reduce group debt and maintain ratios within current rating limits, given that operating cash flow will likely continue to deteriorate at a faster-than-expected pace. Although the company's international diversification partially mitigates the domestic pressure on its revenues, limited cash up-streaming and the expected lower growth rates at its Brazilian subsidiary Telecom Italia Mobile (TIM) Brazil could challenge Telecom Italia's ability to meet group financial guidance.
WHAT COULD CHANGE THE RATING DOWN/UP
Further downward pressure on the rating could potentially result if (1) the overall economic conditions in Italy continue to negatively affect Telecom Italia's operating performance and management is unable to offset this by strengthening the balance sheet; and (2) the company's net adjusted debt/EBITDA ratio deteriorates to above 3.2x with no prospect of improvement.
In view of today's action, Moody's does not currently anticipate upward rating pressure. However, Moody's could consider stabilizing the outlook if the company contained the deterioration in financial metrics on the back of a coherent strategy and supportive macro and operating conditions in Italy. Moody's could consider a rating upgrade if, alongside the conditions for the stable outlook, credit metrics improved, including a net adjusted debt/EBITDA comfortably below 2.8x on a sustainable basis.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was the Global Telecommunications Industry published in December 2010 and Debt and Equity Treatment for Hybrid Instruments of Speculative-Grade Nonfinancial Companies published in July 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
Telecom Italia Group (consisting of Telecom Italia S.p.A. and its subsidiaries) is the leading integrated telecommunications provider in Italy, delivering a full range of services and products, including telephony, data exchange, interactive content and information and communications technology solutions. In addition, the group is one of the top telecoms players in Argentina and in the Brazilian mobile market, operating through its subsidiary Telecom Italia Mobile (TIM) Brazil. Telecom Italia's major shareholder is a consortium (Telco S.p.A.) composed of Telefónica S.A. (Baa2 negative), the insurance company Generali, and the banks Mediobanca and Intesa Sanpaolo. This consortium holds a 22.4% stake in Telecom Italia. For 2012, Telecom Italia reported EUR29.5 billion in revenue and EUR11.7 billion in EBITDA.
Downgrades:
..Issuer: Olivetti Finance N.V.
....Senior Unsecured Regular Bond/Debenture May 14, 2032, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Downgraded to Ba1 from Baa3
..Issuer: Telecom Italia Capital S.A.
....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture Oct 1, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 4, 2018, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jul 18, 2036, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 15, 2013, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 15, 2033, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 4, 2038, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 30, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 30, 2034, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 18, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 18, 2019, Downgraded to Ba1 from Baa3
....Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3
..Issuer: Telecom Italia Finance, S.A.
....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Downgraded to Ba1 from Baa3
..Issuer: Telecom Italia S.p.A.
....Junior Subordinated Regular Bond/Debenture Mar 20, 2073, Downgraded to Ba3 from Ba2
....Multiple Seniority Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 23, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 7, 2016, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 15, 2017, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 24, 2019, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture May 19, 2023, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 29, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Mar 17, 2055, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 22, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 25, 2016, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 25, 2020, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture May 25, 2018, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 21, 2020, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Feb 10, 2022, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 20, 2017, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture May 19, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 20, 2017, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 29, 2019, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 14, 2018, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 15, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Mar 21, 2016, Downgraded to Ba1 from Baa3
..Issuer: Telecom Italia S.p.A. (old)
....Senior Unsecured Bank Credit Facility, Downgraded to Ba1 from Baa3
Assignments:
..Issuer: Olivetti Finance N.V.
....Senior Unsecured Regular Bond/Debenture May 14, 2032, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia Capital S.A.
....Senior Unsecured Regular Bond/Debenture Oct 1, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 4, 2018, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jul 18, 2036, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Nov 15, 2013, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Nov 15, 2033, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 4, 2038, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 30, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 30, 2034, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 18, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 18, 2019, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia Finance, S.A.
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia S.p.A.
.... Probability of Default Rating, Assigned Ba1-PD
.... Corporate Family Rating, Assigned Ba1
....Junior Subordinated Regular Bond/Debenture Mar 20, 2073, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Nov 23, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 7, 2016, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Mar 17, 2055, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 22, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Dec 15, 2017, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 25, 2016, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 25, 2020, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture May 25, 2018, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 21, 2020, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Feb 10, 2022, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 20, 2017, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 24, 2019, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture May 19, 2023, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture May 19, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 20, 2017, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Dec 29, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 29, 2019, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Dec 14, 2018, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 15, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Mar 21, 2016, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia S.p.A. (old)
....Senior Unsecured Bank Credit Facility, Assigned a range of LGD4, 50 %
Outlook Actions:
..Issuer: Olivetti Finance N.V.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia Capital S.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia Finance, S.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia S.p.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia S.p.A. (old)
....Outlook, Changed To Negative From Rating Under Review
The rating action follows the company's failure to strengthen its balance sheet and the accompanying announcement on 3 October of the resignation of its Chairman and CEO, Mr. Bernabe.
"We are downgrading Telecom Italia's ratings primarily because the recent resignation of the CEO has increased uncertainty regarding the company's ability to strengthen its balance sheet sufficiently to mitigate the declining trend in its domestic revenues and EBITDA," says Carlos Winzer, a Moody's Senior Vice President and lead analyst for Telecom Italia.
As part of today's rating action, the rating agency has assigned a Ba1 corporate family rating to Telecom Italia, in line with Moody's policy for non-investment-grade ratings. Concurrently, Moody's has assigned a Ba1-PD probability of default rating (PDR) to the company. The outlook on the ratings is negative.
The rating action concludes the review for downgrade initiated by Moody's on 8 August 2013.
A full list of affected ratings is provided towards the end of this press release.
RATINGS RATIONALE
Telecom Italia's ratings were placed on review for downgrade on 8 August, driven primarily by the deterioration in its domestic revenues and EBITDA resulting from the worsening economy, higher unemployment, adverse regulatory effects and more intense competition in Italy. The review was also driven by Telecom Italia's inability to meet its domestic and group EBITDA targets, with a high likelihood of a downgrade if the company failed to meet ambitious plans to reduce debt and improve financial metrics by year-end 2013.
Today's rating action reflects the resignation of Telecom Italia's CEO, which in Moody's view reflects a lack of support from shareholders for a material capital increase to strengthen the company's balance sheet. As a result, an improvement in Telecom Italia's credit quality no longer appears likely. The remaining options available to strengthen the credit, whether related to capital or operating plans, regulation, financial strategy or asset sales, will take time to implement, even if successful. There will be uncertainty and implementation risk until the new CEO has appraised its options, set out and started to deliver on a new strategy, and this is reflected in the negative outlook.
In Moody's view, there is increased uncertainty regarding the company's strategy and ability to reverse the declining trend in its domestic revenues and EBITDA. This deterioration is a result of the continued weakening of Italy's economy, higher unemployment, adverse regulatory effects and more intense competition in the country. Moreover, the downgrade reflects Moody's expectation that Telecom Italia's domestic revenues and EBITDA will deteriorate further and that the company will fail to meet its domestic and group EBITDA targets for 2013.
Telecom Italia's business risk has increased as a result of the expected further deterioration in the company's operating performance, as well as the low visibility regarding when management might be able to reverse the declining trend.
As a result, Telecom Italia is likely to struggle to achieve its reported net financial position target of less than EUR27 billion by year end.
In particular, Moody's notes that management is struggling to offset the negative effect on the group of the tougher-than-expected operating conditions for its domestic mobile business in 2013. This business has experienced intensified competitive pressure and adverse regulation.
Moody's expects operating conditions in Italy to remain challenging for some time, and recognises the limited options that Telecom Italia has to strengthen its balance sheet. Major shareholders appear opposed to a material capital increase and could prefer Telecom Italia to strengthen its balance sheet in combination with carrying out an effective restructuring of its domestic operations. Some of these measures will take time to implement and imply substantial execution risk.
Therefore, management may find it difficult to meet its deleveraging commitment of a reported net financial position/EBITDA of below 2.0x in the next 24 months.
Moody's considers that Telecom Italia's Ba1 rating is supported by the company's (1) scale; (2) integrated telecoms business model, with strong market positions in both the fixed and mobile segments; (3) geographical diversification, mainly as a result of its presence in Brazil and Argentina; (4) continued commitment to debt reduction and financial discipline; and (5) high operating margins, ongoing operational expenditure (opex) reductions and strong liquidity. The Ba1 rating also factors in the deterioration in Telecom Italia's operating performance, including an expected further decline in EBITDA this year, and the challenges management is facing to offset the higher business risk with a stronger financial profile.
Moody's considers Telecom Italia's liquidity to be adequate, based on the company's free cash flow generation, available cash resources and committed credit lines, as well as an extended debt maturity profile. Telecom Italia's debt maturities are fairly evenly spread out and back-loaded, with more than 50% of liabilities due beyond 2016.
Moody's acknowledges the company's currently ample access to liquidity due to its current cash position of more than EUR7.1 billion (after the recent bond issue of EUR1 billion on 19 September 2013) and around EUR6.7 billion in available bank funding (EUR6.5 billion of long-term credit facilities), which support its debt maturities through 2015. In addition, Moody's takes comfort from Telecom Italia's diversified sources of funding, including signed EUR4 billion and EUR3 billion forward start facilities maturing May 2017 and March 2018 respectively, as well as from the fact that a significant portion of its committed lines are with international banks.
Moody's has now removed the equity credit assigned to the EUR750 million of hybrid bonds issued by Telecom Italia in March of this year. This follows the publication of Moody's methodology for assigning equity credit to hybrid bonds issued by speculative-grade non-financial companies (Debt and Equity Treatment for Hybrid Instruments of Speculative-Grade Non-financial Companies, published in July 2013).
The negative outlook reflects Moody's expectation that Telecom Italia will continue to face substantial challenges in 2013 and 2014, including management transition, the ongoing recession in Italy, adverse regulation and rising levels of competition, all of which have served to erode the company's domestic revenues and EBITDA. In addition, Moody's questions the extent to which Telecom Italia will be able to meet its commitments to reduce group debt and maintain ratios within current rating limits, given that operating cash flow will likely continue to deteriorate at a faster-than-expected pace. Although the company's international diversification partially mitigates the domestic pressure on its revenues, limited cash up-streaming and the expected lower growth rates at its Brazilian subsidiary Telecom Italia Mobile (TIM) Brazil could challenge Telecom Italia's ability to meet group financial guidance.
WHAT COULD CHANGE THE RATING DOWN/UP
Further downward pressure on the rating could potentially result if (1) the overall economic conditions in Italy continue to negatively affect Telecom Italia's operating performance and management is unable to offset this by strengthening the balance sheet; and (2) the company's net adjusted debt/EBITDA ratio deteriorates to above 3.2x with no prospect of improvement.
In view of today's action, Moody's does not currently anticipate upward rating pressure. However, Moody's could consider stabilizing the outlook if the company contained the deterioration in financial metrics on the back of a coherent strategy and supportive macro and operating conditions in Italy. Moody's could consider a rating upgrade if, alongside the conditions for the stable outlook, credit metrics improved, including a net adjusted debt/EBITDA comfortably below 2.8x on a sustainable basis.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was the Global Telecommunications Industry published in December 2010 and Debt and Equity Treatment for Hybrid Instruments of Speculative-Grade Nonfinancial Companies published in July 2013. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.
Telecom Italia Group (consisting of Telecom Italia S.p.A. and its subsidiaries) is the leading integrated telecommunications provider in Italy, delivering a full range of services and products, including telephony, data exchange, interactive content and information and communications technology solutions. In addition, the group is one of the top telecoms players in Argentina and in the Brazilian mobile market, operating through its subsidiary Telecom Italia Mobile (TIM) Brazil. Telecom Italia's major shareholder is a consortium (Telco S.p.A.) composed of Telefónica S.A. (Baa2 negative), the insurance company Generali, and the banks Mediobanca and Intesa Sanpaolo. This consortium holds a 22.4% stake in Telecom Italia. For 2012, Telecom Italia reported EUR29.5 billion in revenue and EUR11.7 billion in EBITDA.
Downgrades:
..Issuer: Olivetti Finance N.V.
....Senior Unsecured Regular Bond/Debenture May 14, 2032, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Downgraded to Ba1 from Baa3
..Issuer: Telecom Italia Capital S.A.
....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture Oct 1, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 4, 2018, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jul 18, 2036, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 15, 2013, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 15, 2033, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 4, 2038, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 30, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 30, 2034, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 18, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 18, 2019, Downgraded to Ba1 from Baa3
....Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3
..Issuer: Telecom Italia Finance, S.A.
....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Downgraded to Ba1 from Baa3
..Issuer: Telecom Italia S.p.A.
....Junior Subordinated Regular Bond/Debenture Mar 20, 2073, Downgraded to Ba3 from Ba2
....Multiple Seniority Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba1 from (P)Baa3
....Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Nov 23, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 7, 2016, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 15, 2017, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 24, 2019, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture May 19, 2023, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 29, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Mar 17, 2055, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 22, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 25, 2016, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 25, 2020, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture May 25, 2018, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 21, 2020, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Feb 10, 2022, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Sep 20, 2017, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture May 19, 2014, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 20, 2017, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jan 29, 2019, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Dec 14, 2018, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Jun 15, 2015, Downgraded to Ba1 from Baa3
....Senior Unsecured Regular Bond/Debenture Mar 21, 2016, Downgraded to Ba1 from Baa3
..Issuer: Telecom Italia S.p.A. (old)
....Senior Unsecured Bank Credit Facility, Downgraded to Ba1 from Baa3
Assignments:
..Issuer: Olivetti Finance N.V.
....Senior Unsecured Regular Bond/Debenture May 14, 2032, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia Capital S.A.
....Senior Unsecured Regular Bond/Debenture Oct 1, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 4, 2018, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jul 18, 2036, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Nov 15, 2013, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Nov 15, 2033, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 4, 2038, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 30, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 30, 2034, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 18, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 18, 2019, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia Finance, S.A.
....Senior Unsecured Regular Bond/Debenture Jan 24, 2033, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia S.p.A.
.... Probability of Default Rating, Assigned Ba1-PD
.... Corporate Family Rating, Assigned Ba1
....Junior Subordinated Regular Bond/Debenture Mar 20, 2073, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Nov 23, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 7, 2016, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Mar 17, 2055, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 22, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Dec 15, 2017, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 25, 2016, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 25, 2020, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture May 25, 2018, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 21, 2020, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Feb 10, 2022, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Sep 20, 2017, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 24, 2019, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture May 19, 2023, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture May 19, 2014, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 20, 2017, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Dec 29, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jan 29, 2019, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Dec 14, 2018, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Jun 15, 2015, Assigned a range of LGD4, 50 %
....Senior Unsecured Regular Bond/Debenture Mar 21, 2016, Assigned a range of LGD4, 50 %
..Issuer: Telecom Italia S.p.A. (old)
....Senior Unsecured Bank Credit Facility, Assigned a range of LGD4, 50 %
Outlook Actions:
..Issuer: Olivetti Finance N.V.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia Capital S.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia Finance, S.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia S.p.A.
....Outlook, Changed To Negative From Rating Under Review
..Issuer: Telecom Italia S.p.A. (old)
....Outlook, Changed To Negative From Rating Under Review
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