Fitch rates TIM Hellas notes BB-, B-

Fitch Ratings said it assigned TIM Hellas Telecommunications SA ratings of senior unsecured B with a stable outlook and short-term B.

At the same time, Fitch assigned a BB- rating to both the first-priority senior revolving credit facility and to the senior secured notes issued by Hellas Telecommunications (Luxembourg) Investment V. The senior unsecured notes issued by Hellas Telecommunications (Luxembourg) Investment III have been assigned a B- rating.

Fitch said the senior unsecured rating reflects TIM Hellas' position as the third operator in the mature Greek mobile market and its high financial leverage.

"The Greek mobile market is now reasonably mature and TIM Hellas faces increased competition from an aggressive fourth operator as well as regulatory pressure on termination rates, which have contributed to a decline in EBITDA in 2004 and the first half of 2005," said Michelle De Angelis, associate director in Fitch's Leveraged Finance Group. "However, the agency notes the fresh strategic focus brought by the new owners and a new management team, which has resulted in the recent improvement in operational indicators, although this has yet to translate into improved financial performance."

Nonetheless, Fitch said it expects performance to stabilize over the next year and the company to return to growth by 2007. Furthermore, the financing structure, which includes no amortizing debt and a (currently undrawn) revolving credit facility, provides significant financial flexibility, which supports the rating.

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