Moody's says cuts Telecom Italia to Ba1 from Baa3
MILAN Oct 8 (Reuters) - Italian phone company Telecom Italia's credit rating was cut to Ba1 from Baa3 by Moody's, the ratings agency said on Tuesday, citing the heavily indebted group's fall into junk territory because of a failure to strengthen its balance sheet.
The ratings action means that Telecom Italia has lost its investment grade status, making it more expensive to borrow money.
"We are downgrading Telecom Italia's ratings primarily because the recent resignation of the CEO has increased uncertainty regarding the company's ability to strengthen its balance sheet sufficiently to mitigate the declining trend in its domestic revenues and EBITDA," said Carlos Winzer, a Moody's senior vice president and lead analyst for Telecom Italia.
Standard and Poor's placed the company on creditwatch negative for a possible downgrade to junk status on Oct. 7.
Telecom Italia, burdened by nearly 29 billion euros of net debt and a deep recession in Italy, said last week its chief executive, 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 Nov. 7.
(Reporting by Jennifer Clark; Editing by Dan Grebler)
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