S&P Rates Italy's Wind

LONDON -- Standard & Poor's Ratings Services said today it assigned its 'B+' corporate credit rating to Italian alternative telecommunications services provider Wind Telcomunicazioni SpA. The outlook is positive. At the same time, Standard & Poor's assigned its 'B+' debt rating to Wind's €6.85 billion senior secured credit facility and a recovery rating of '2', indicating our expectation of substantial recovery (in the range of 80%-100%) of principal for senior secured lenders in the event of a payment default.

Standard & Poor's also assigned its 'B' debt rating to Wind's €700 million second-lien credit facility.

"The ratings on Wind are constrained by the company's initially very high financial leverage and the relatively weak position of its fixed-line operation," said Standard & Poor's credit analyst Leandro de Torres Zabala.

"The ratings are supported, however, by the company's established position as the third-largest mobile operator in the attractive Italian market, a supportive regulatory environment, and expected generation of meaningful free cash flow from 2005, despite sizable capital investments in the continuing development of its networks," added Mr. de Torres Zabala.

There is potential for a rating upgrade in the medium term, if Wind consistently raises its free cash flow generation profile, and critically, reduces its financial leverage to a ratio of adjusted net debt to recurring EBITDA below 5.0x. To this effect, it is critical that Wind successfully defends its position as Italy's third-largest mobile operator, significantly grows revenues in mobile services and broadband access, stems the erosion of fixed voice revenues, and maintains operating and capital expenditures at moderate levels.

Standard & Poor’s