S&P revises Telecom Italia to positive

Standard & Poor's said it has revised its outlook to positive from stable on Telecom Italia SpA, Italy's dominant telecommunications services provider, following a review of the group's business strategy and financial policy for the next two years.

At the same time, S&P affirmed its BBB+ long-term and A-2 short-term ratings on the company.

S&P said the ratings continue to primarily reflect Telecom Italia's superior business fundamentals in both its domestic fixed-line and mobile-telephony businesses, and the offsetting impact of high leverage following the August 2003 merger with former parent Olivetti SpA. At the end of September, Telecom Italia's on-balance-sheet net debt was €34.3 billion.

"Telecom Italia's solid cash flow generation, strong operating performance, and continued focus on debt reduction could lead to credit metrics compatible with a higher rating within the next 18 months," said S&P credit analyst Guy Deslondes.

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