(Finance) – The 2022 results of Telecom Italy “they showed that the company outperformed its guidance“, but “have no impact on its current rating (BB-/Negative)”. Fitch said in a note, stressing however that greater visibility on the company’s stabilization or EBITDA growth, supported by an improvement in its domestic operations, combined with stronger free cash flow and liquidity,”it could lead to a change of the Outlook to Stable“.
Analysts recall that TIM saw its revenues increase for the first time since 2017, as strong growth in Brazil offset losses in its domestic operations. The EBITDA turnaround “remains exposed to execution risks in the face of strong competitive pressures and an adverse macroeconomic environment”.
It is emphasized that TIM has improved its liquidity position from the 850 million euro bond issue in January with a new loan from the European Investment Bank expected in the first half of 2023, the amount of which was not disclosed.
“With around 50% of financial debt maturing by 2025, the refinancing risk remains relevantgiven TIM’s significant investment outlays and negative FCF sustained at a time of fierce market competition, rising inflation and high interest rates.
Fitch concludes his analysis by stating that “TIM’s strategic options for reducing debt through the divestment of its network businesses and enterprise division remain under discussion” and underlining that it will continue to evaluate the former monopolist “based on its consolidated profile until there is full visibility on any transaction, and therefore on any changes in the commercial and financial structure of the company”.