Fitch eyes Telecom Italia positively

Fitch Ratings said it placed Telecom Italia SpA's (TIM) BB- long-term issuer default and senior unsecured ratings on rating watch positive.

The RWP follows TIM's announced sale of the main part of its fixed-line network assets (NetCo.) to a consortium led by funds managed by Kohlberg Kravis Roberts & Co. LP. The transaction is expected to close over the third quarter of 2024.

TIM intends to use the proceeds to repay about €14 billion in debt. The deal also includes the potential payment of earn-outs to TIM.

“The RWP reflects Fitch's expectations of significantly lower financial risk for TIM after the completion of the disposal and debt reimbursement. We expect the benefit of the material deleveraging announced to offset the weakening of TIM's business profile after the disposal of NetCo. The combination of these factors is likely to lead to an upgrade up to BB+ upon resolution of the RWP, which will be after the disposal is completed and the debt prepayment delivered according to plan,” the agency said in a statement.

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