...Telefonica Deutschland Holding AG (TEF DE) is the largest mobile network operator in Germany by subscribers and the third largest by revenues, with 37% subscriber and 29% revenue market shares at end-2017. The company is continuing with operational integration and transformation following its merger with E-Plus in 2014, and is aiming to grow in line with the market, although it slightly lagged behind its peers in terms of subscriber and revenue performance throughout 2016-2017. TEF DE is managing its leverage at or below 1x net debt/OIBDA (company definition), but relies heavily on operating leases, resulting in substantial off-balance-sheet debt and significantly higher funds from operations (FFO) adjusted net leverage (as defined by Fitch, 2.3x at end-2017) and tight FFO fixed charge coverage (3.6x at end-2017). Network integration has not yet resulted in substantial lease synergies on a net basis, leading to weaker coverage and higher leverage compared with Fitch's earlier expectations....
