Telecom Italia is said to seek a $3.3B state-backed credit line

Telecom Italia (TIM) has started talks with multiple banks to raise nearly 3 billion euros ($3.3 billion) in funding that could be partly guaranteed by Servizi Assicurativi del Commercio Estero (SACE), Italy’s export insurer.

Under the burden of the total gross debt of over 30 billion euros, TIM has almost 3 billion euros bonds coming in due this year, the firm’s annual reports showed.

TIM is talking to BNP Paribas, Credit Agricole, Santander, and UniCredit, over an agreement to secure a credit line.

Under a guarantee scheme Italy used during the first wave of COVID-19 in 2020 to help firms raise new debt, SACE is allowed to cover up to 80% of the loan.

However, according to the sources, there are doubts pertaining to TIM’s eligibility to tap such a scheme.

A new loan backed by the SACE would aid TIM in boosting its reserves after it booked an 8.6 billion euro ($9.12 billion) loss in the fourth quarter because of impairments and to avoid possible future downgrades. The Italian telecommunications firm has been struggling for years from high indebtedness amid fierce competition in the country’s telecommunications sector.

TIM faces a 1.7 billion euro ($1.84 billion) payment by the end of September 2022 as part of the amount it put in the pot to secure frequencies in the 5G mobile spectrum auction.