S&P watches Telecom Italia positively

S&P said it placed all its ratings for Telecom Italia SpA (TIM), including its B+ issuer and senior unsecured ratings, on CreditWatch with positive implications after the company agreed to sell its fixed-network infrastructure assets (NetCo) to Kohlberg Kravis Roberts & Co. LP.

“TIM's leverage could improve significantly. The offer values NetCo at €18.8 billion, excluding any potential earnout payments. We understand that TIM will use a significant portion of the proceeds to repay debt at closing. The exact details of TIM's planned capital structure are unavailable at this stage. However, TIM has publicly stated that, at the closing of the transaction, company-adjusted net debt to EBITDA will be less than 2x, a significant improvement from around 5x in the first half of 2023,” S&P said in a press release.

The agency said it estimates on pro forma basis TIM’s S&P Global Ratings-adjusted debt to EBITDA would be in the 3.5x-4x range.

“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 summer of 2024,” S&P said.

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