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    TIT   IT0003497168

TELECOM ITALIA S.P.A.

(TIT)
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Telecom Italia S p A : shares, bonds dip after Moody's downgrade

12/11/2020 | 11:28am EDT
FILE PHOTO: Telecom Italia new logo is seen at the headquarter in Rozzano neighbourhood of Milan

MILAN (Reuters) - Shares in Telecom Italia (TIM) fell as much as 4% on Friday after Moody's downgraded the credit ratings of Italy's biggest phone group further into junk territory and said the outlook remained negative.

Moody's cut TIM's long-term rating to "Ba2" from "Ba1," citing "a very competitive operating environment in Italy which will further constrain the company's ability to strengthen cash flow generation and reduce leverage."

The rating agency flagged higher business and financial risks due to fresh investments in Brazil, the restored dividend policy and the increasing complexity of the group structure.

At 1545 GMT, TIM shares were down 3.2%, compared with a 2.5% fall in Europe's telecom index.

"Moody's effectively highlighted the lights and shadows of TIM's equity story," Banca IMI analysts said.

"Despite CEO (Luigi Gubitosi's) efforts to organically and inorganically reduce the group's leverage, Moody's downgrade separates TIM from the investment grade level by two notches," it wrote in a note.

Fitch and S&P remain one notch above Moody's, which expects TIM's adjusted net debt-to-core profit ratio to peak at 4.2 times in 2020 and to gradually start decreasing to reach 3.7 times by 2022.

Analysts said Moody's move was anticipated given the negative outlook on the rating since 2019 and the impact of the pandemic which hurt 2020 earnings.

"We don't expect any significant impact on TIM cost of debt," a broker said in a note to clients.

However, the price of TIM's bonds fell across the curve, pushing yields higher on the secondary market.

The yield on a bond maturing in May 2026 rose to 1.71% from 1.60% on Thursday at 1545 GMT, while a September 2025 bond yielded 1.64% on Friday, up from 1.50% the previous close.

TIM's gross debt totalled 32.3 billion euros ($39.2 billion)as of Sept. 30.

($1 = 0.8243 euros)

(Reporting by Elvira Pollina and Claudia Cristoferi in Milan; Editing by Mark Potter and Matthew Lewis)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
EURO / BRAZILIAN REAL (EUR/BRL) -0.43% 5.1528 Delayed Quote.-18.41%
TELECOM ITALIA S.P.A. -0.22% 0.2722 Delayed Quote.-37.31%
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Financials
Sales 2022 15 614 M 16 472 M 16 472 M
Net income 2022 131 M 138 M 138 M
Net Debt 2022 23 196 M 24 471 M 24 471 M
P/E ratio 2022 -55,4x
Yield 2022 1,81%
Capitalization 5 697 M 6 011 M 6 011 M
EV / Sales 2022 1,85x
EV / Sales 2023 1,80x
Nbr of Employees 51 893
Free-Float 77,0%
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Mean consensus HOLD
Number of Analysts 20
Last Close Price 0,27 €
Average target price 0,34 €
Spread / Average Target 23,5%
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Managers and Directors
Pietro Labriola Chief Executive Officer & Director
Adrián Calaza Chief Financial Officer
Salvatore Rossi Chairman
Michele Gamberini Chief Technology & Information Officer
Stefano Siragusa Chief Revenue, Information & Media Office
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