The Tim logo is seen at its headquarters in Rome, Italy November 22, 2021. REUTERS/Yara Nardi

ROME, July 22 (Reuters) - Telecom Italia (TLIT.MI) bonds and shares fell on Friday after ratings agency Moody's downgraded the phone group's credit rating for the second time in four months, pushing it further into junk territory .

Moody's on Thursday cut TIM's rating by one notch to 'B1', confirming a negative outlook, citing expectations that the former phone monopoly's leverage would remain high and free cash flow would stay negative over the next two to three years. read more

"The macroeconomic environment has deteriorated since we downgraded [Telecom Italia's] rating to Ba3 in March, reducing the visibility on Telecom Italia's operating performance and its expected deleveraging path", Moody's said.

TIM's stock fell as much as 2% to 0.2155 euros on Friday, close to a all-time low hit on Thursday.

Yields of Telecom Italia's bonds - which move inversely to price - were up across the curve, with the company's bond maturing in January 2033 yielding 7.2%, up from 6.995% at previous close .

With revenue and margins under pressure for years in its competitive domestic market, TIM is working on a revamp based on splitting off parts of its business as it strives to raise cash and cut its debt pile.

Such a plan mostly relies on a potential deal with state lender CDP, which aims to combine TIM's network infrastructure with that of rival fibre optic firm Open Fiber to create a unified national network champion under state control.

CDP, which is TIM second largest investor, owns 60% of Open Fiber.

TIM and CDP sealed a preliminary pact in May aimed reaching a binding deal by October. But analysts warned the collapse of the government and early election could hamper talks, which are complicated by valuation and regulations issues.

TIM's top investor Vivendi is seeking a valuation of at least 31 billions euro for TIM's fixed network assets, which include TIM's domestic access network and submarine cable unit Sparkle, a source close to the French media group had said.

A person familiar with the matter said CDP could submit a non-binding bid at the end of August.

Our Standards: The Thomson Reuters Trust Principles.

A U.S. appeals court on Thursday refused to revive Michael Avenatti's $250 million defamation lawsuit against Fox News Network over its coverage of the 2018 arrest of the now-imprisoned celebrity lawyer and critic of Donald Trump.

Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.

Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.

The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.

The industry leader for online information for tax, accounting and finance professionals.

Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.

Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.

Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.

All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.