Moody's upgrade and scope
Moody's has upgraded the long-term corporate family rating for TIM S.p.A. to Ba1 from Ba2 and elevated the probability of default rating to Ba1-PD from Ba2-PD. The ratings agency concurrently raised the ratings on Telecom Italia's senior unsecured debt and on backed senior unsecured debt issued by its subsidiaries, Telecom Italia Capital S.A. and Telecom Italia Finance, S.A., to Ba1 from Ba2. Moody's left the outlook for all three rated entities at stable.
Credit drivers cited by Moody's
The rating action reflects what Moody's characterises as the successful execution of Telecom Italia's strategic plan, which has produced clearer credit improvements and a structurally deleveraged balance sheet. Moody's highlighted steady operating performance, including resilient domestic service revenues supported by fixed average revenue per user growth and expansion in the enterprise segment, together with sustained mid-single-digit growth in Brazil.
2025 performance and metrics
On Moody's basis, adjusted EBITDA for 2025 rose 6% to 4.3 billion. Adjusted free cash flow strengthened to around 400 million. Leverage metrics improved materially in 2025, with Moody's-adjusted debt to EBITDA declining to 3.5x from roughly 4.0x in 2024, and to 2.7x on a net basis from about 3.0x in 2024.
Near-term expectations and cash generation
Moody's projects continued EBITDA growth in the mid-single-digit percentages annually over 2026-27, driven by robust enterprise growth, improving consumer metrics - including higher fixed average revenue per user and reduced churn - and steady revenue expansion in Brazil. The agency expects Moody's-adjusted free cash flow to average about 600 million per year over 2026-28, based on steady earnings growth, lower interest expense and stable capital spending.
Planned proceeds and use of cash
In 2026, Telecom Italia is anticipated to receive near 1 billion from resolution of a 1998 state licensing fee dispute and around 700 million from the pending disposal of its submarine cable unit, Sparkle. A sizeable portion of these proceeds will be returned to shareholders through the cash settlement tied to conversion of savings shares into ordinary shares and a share buyback programme of up to 400 million; the remainder is expected to support further deleveraging.
Leverage outlook
Moody's expects adjusted leverage to continue to fall, targeting roughly 2.5x by 2028, or about 2.0x on a net basis, supported by repayment of debt maturing over 2026-28 and the planned use of proceeds described above.
This article presents the rating action and the financial metrics Moody's used to justify the upgrade. It summarises Moody's stated expectations for Telecom Italia's cash flow, deleveraging trajectory and planned shareholder returns.