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S&P raises Telecom Italia rating by two notches after network sale

S&P Global raised Telecom Italia’s (TIM) credit rating by two notches to BB on Tuesday after Italy’s biggest telecoms group finalised the sale of its domestic fixed-line access network to KKR in a deal worth up to 22 billion euros ($23.77 billion).

Backed by the Italian government, the network disposal is aimed at slashing the debt pile of the former phone monopoly, which has been under pressure for years due to stiff price competition in its domestic market.

S&P said the outlook for the rating is now stable. The agency had put TIM’s credit rating on review for a potential upgrade in November, when the company’s board approved the network sale.

“Netco’s disposal has reduced materially the group’s scale, earnings, asset base, and operations,” S&P Global said in its report.

“However, the group’s target of a moderate capital structure following the transaction offsets this,” it added.

S&P stripped TIM of its investment grade status in 2013. After Tuesday’s ratings action, TIM remains two notches below S&P’s investment grade. Reuters

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