Fitch: Telecom Italia cut to negative

Fitch Ratings said it revised the outlook on Telecom Italia SpA's senior unsecured rating to negative from stable. At the same time, the rating is affirmed at A-.

Fitch said the rating action reflects the announcement by Telecom Italia that it is to launch a public tender offer for up to two-thirds of the outstanding ordinary shares and up to 100% of the outstanding savings shares in 56% owned wireless subsidiary Telecom Italia Mobile, the success of which would be expected to be followed by a merger during 2005.

While Fitch said it recognizes the industrial logic of the transaction, the change in the outlook reflects the increased debt anticipated by the transaction and the extended period of time that debt protection measures are likely to remain at levels that are weak for an A- rating.

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