Rating unchanged, for the moment, but negative opinion. Standard & Poor's revises its outlook on Telecom Italia downwards, a few days after the move by Moody's, which had placed the group under observation for a possible downgrade, following the publication of the half-yearly report. According to the S&P agency, it is the "lower guidance on 2013 profits, due to the difficult domestic economic context, strong competition and strong regulatory pressure on revenues".
"We continue to evaluate Telecom Italia's business risk profile as satisfactory and its financial risk profile as significant, according to our criteria - continues S&P - the negative outlook reflects the possibility of a downgrade in the long-term rating of a notch within the next 12 months, if Telecom Italia's adjusted debt-to-EBITDA ratio exceeds the 3,3x threshold (and 3,5x including Brazil), due to persistently weak operating results and limited debt reduction”. Downgrading risk also in the event that the company fails to improve the ratio between funds from operations (FFo) and debt to 24%-26% by the end of 2014.
Telecom Italia will be able to sleep peacefully, with a stable outlook, only in the event of a sustainable lowering of the debt/ebitda ratio below 3,3, if the Ffo/debt ratio rises between 25% and 30% and if the group's (excluding Argentina) will stabilize in 2014.
