S&P May Cut Telecom Italia To Junk

S&P May Cut Telecom Italia To Junk

The Italian Communications company Telecom Italia SpA (ADR) (NYSE:TI) (BIT:TIT) may have its debt rating cut to junk by Standard & Poor’s, according to a report from Bloomberg breaking this afternoon. The company is in trouble after the resignation of its CEO Franco Bernabe last week. The executive cut the likelihood of a large capital increase, according to a statement from Fitch.

S&P May Cut Telecom Italia To Junk

The news that the firm’s debt may be downgraded by S&P 500 (INDEXSP:.INX) on the departure of Bernabe has been met with negativity on today’s market. Shares lost 1.72 percent in Italy in today’s trading. The ADR, which trades on the New York Stock Exchange, has lost more than 1.5 percent for the day at time of writing.

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Telecom Italia ratings cut

Fitch, which rates the company’s debt at ‘BBB-,’ said that the departure of the company’s CEO means that shareholders are unlikely to accept a plan that would see the company issue new shares in order to relieve it of its debt burden. That means the firm is likely to languish under that burden for some time to come, and will be forced to sell more assets in order to pay back the owed money.

The company has appointed Marco Patuano as temporary CEO of the company as it seeks to find a replacement for Bernabe. Patuano has been at the company for more than two decades and has served in a number of executive roles at the firm.

Italian problems at Telecom Italia

Telecom Italia SpA (ADR) (NYSE:TI) (BIT:TIT) was founded in 1994 and is the product of mergers between several state-owned telecommunications concerns in Italy. The company was privatized in 1997. The firm’s revenues slowed as Italy slipped deeper into austerity and economic troubles.

The problems at Telecom Italia SpA (ADR) (NYSE:TI) (BIT:TIT) are a reflection of the problems that plague the entirety of Italy. The company is not making enough money to pay its obligations, and is saddled with debt almost too big to bear. The S&P 500 (INDEXSP:.INX) report on the company should contain some interesting commentary on the firm’s current problems.

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