Morning in the red for the shares of Telecom Italia, which at the opening in Piazza Affari drop more than two percentage points, the worst drop of the Ftse Mib. To weigh on the title of the group is the decision of Standard & Poor's. Last night the American rating agency announced that it had seats negative creditwatch assessments on the Italian telecommunications company (BBB-/A-3).
Telecom's credit rating could therefore be cut to junk level, says S&P, as reported by the Bloomberg agency. A push towards the possible downgrade would have been the resignation of the executive chairman, Franco Bernabè, and uncertainty about future strategic orientation.
The verification will be completed by S&P by the end of November, after having examined the strategic orientation of the group and the potential implications on the financial and business risk profile with Telecom's management.
According to analysts, the company has limited options to accelerate debt relief, with an unpredictable impact on the group's business and risk profile.
As for theincrease of Telefonica's stake in Telco, the holding company which owns 22,4% of Telecom, the rating agency explains that “while it understands that Telefonica will not participate in board discussions on Latin America, its greater control creates further risks of a continued lack of strategic direction at Telecommunications".
S&P has also already revised the score on management performance and governance from "satisfactory" to "fair", given the lack of clarity in the strategies, including the uncertainty on the spin-off of the network and the cut of the guidance.
Analysts forecast for 2013 a drop in theEbitda of 8-9%, while for 2014, in the best scenario, a decrease of around 5% is expected, compared to the previous estimates which were between -2 and -4%.
"At this point - writes S&P - we do not see convincing signs of stabilization beyond 2014: we believe that traditional fixed telephony, which represents over 40% of revenues from the domestic fixed business, will continue to decline". Furthermore, Telecom will not be able to offset the pressure on the domestic Ebitda with the contribution of the Brazilian activities.
