October 7, 2013 / 5:17 PM / 5 years ago

S&P puts Telecom Italia on creditwatch for possible cut to junk

MILAN (Reuters) - Standard and Poor’s said on Monday it had placed the ratings of Italy’s Telecom Italia on creditwatch negative for a possible downgrade to junk status, citing rising management and governance concerns.

A Telecom Italia phone booth is pictured in front of St Peter's Basilica in Rome September 24, 2013. REUTERS/Alessandro Bianchi

In a statement the rating agency said a one-notch downgrade to “BB+” seemed the more likely option but it added a two-notch cut to “BB” could not be ruled out.

“We believe the group has limited possibilities of accelerating debt reduction or stabilizing its operating performance over the near term,” S&P said.

Telecom Italia, burdened by nearly 29 billion euros of net debt and a deep recession in Italy, said last week its executive chairman Franco Bernabe had resigned.

Bernabe left after failing to win support among core shareholders led by Spain’s Telefonica for his plan for a large capital increase.

The company is scheduled to give a new business plan on November 7.

Reporting by Stephen Jewkes

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