Telecom Italia Cut to Junk by Moody’s After CEO’s Departure

Telecom Italia Cut to Junk by Moody’s After CEO’s Departure

(from bloomberg.com)

“Telecom Italia SpA (TIT) had its credit rating cut to junk status by Moody’s Investors Service, which cited its mounting debt and the ouster of Chief Executive Officer Franco Bernabe. … “The recent resignation of the CEO has increased uncertainty regarding the company’s ability to strengthen its balance sheet,” Moody’s said yesterday in a statement, cutting the company’s rating one level to Ba1. “An improvement in Telecom Italia’s credit quality no longer appears likely.” … Bernabe’s departure last week followed a dispute with shareholders including Madrid-based Telefonica SA (TEF) over how to boost Telecom Italia’s finances. Telecom Italia’s board, which put Chief Operating Officer Marco Patuano in charge of the carrier on Oct. 3, failed to come up with recommendations on how to reduce debt. … Standard & Poor’s and Fitch Ratings have also said they may downgrade Milan-based Telecom Italia, which reported adjusted net debt of 28.8 billion euros ($39 billion) as of June 30. … Telecom Italia fell 1.8 percent today to 62 euro cents in Milan, valuing the company at 11.3 billion euros. The stock is down 9.7 percent this year, headed for its ninth consecutive annual decline. … Telefonica is in favor of a sale of Telecom Italia’s Brazilian unit Tim Participacoes SA (TIMP3), which has a market value of $12 billion, people familiar with the matter have said. Bernabe had been against a sale of Latin American assets and preferred a capital increase and a spinoff of Telecom Italia’s fixed-line network. … Vodafone Group Plc (VOD) isn’t interested in bidding for Tim, said a person with direct knowledge of the company, refuting speculation that the U.K. carrier might make an offer. “

Oh, “that’s was unexpected,” as usual, the ‘so meritable’ politicians “castes,” so efficient into multiplying their golden pensions and benefits, have been talking about the issue for ten years, and ‘as usual’ done absolutely nothing to get anywhere.

Now, the Caio plan over the backbones, that Bernabei did not like, from the point of view of the Republic makes sense and should be implemented somehow, maybe with the help of some Mediaset investment, which would put Mediaset into the video over Internet market, and maybe the collateralization issue can be solved giving them a piece of the useless RAI circus in exchange, which would put both Telecom/Telco and RAI into the internet television market as well.

Then the Bernabei more recent suggestion of going towards regional companies (I interpret it, hoping not to be wrong, as the original telephone companies geography of the thirties,) again to handle the last mile, with IPOs and an effort from the regions for buying into “their territory” infrastructure, and with eventual investment from the part of the Civil Protection system, should be considered, because it can raise enough investments to permit reorganization of debt and investment for telecom into new technologies.

And finally, IMVHO, beyond whatever the telco and telecom interests are, there is no Italian national strategic interest in the investments in south America, “maybe” some interest in the middle east and north Africa, but Brazil ? when are they going to invade us ? and we aren’t going to invade them either, really, for operations in south America RF and satellites are more than sufficient, what would we need a mobile phone company for?.

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