Bulletin: Deutsche Telekom Ratings And Outlook Unaffected By Acquisition Of UPC Austria

FRANKFURT (S&P Global Ratings) Dec. 22, 2017--S&P Global Ratings said today that its ratings and outlook on Deutsche Telekom AG (DT; BBB+/Stable/A-2) are not affected by DT's announcement of its intention to acquire the Austrian operations of cable operator UPC Holding B.V. (BB-/Stable/--) for €1.9 billion. The acquisition of UPC Austria is in addition to DT's recent agreement to purchase Tele2's business in the Netherlands. We think that the transactions reinforce DT's fixed-mobile convergence proposition in these markets. However, Austria and the Netherlands contribute only about 4% of total sales on a pro forma basis by our estimate. At the same time, we expect that the two deals will only marginally weaken DT's credit metrics. We calculate that pro forma

...FRANKFURT (S&P Global Ratings) Dec. 22, 2017--S&P Global Ratings said today that its ratings and outlook on Deutsche Telekom AG (DT; ###+/Stable/A-2) are not affected by DT's announcement of its intention to acquire the Austrian operations of cable operator UPC Holding B.V. (##-/Stable/--) for 1.9 billion. The acquisition of UPC Austria is in addition to DT's recent agreement to purchase Tele2's business in the Netherlands. We think that the transactions reinforce DT's fixed-mobile convergence proposition in these markets. However, Austria and the Netherlands contribute only about 4% of total sales on a pro forma basis by our estimate. At the same time, we expect that the two deals will only marginally weaken DT's credit metrics. We calculate that pro forma 2018 adjusted debt to EBITDA will increase by about 0.1x and that adjusted free operating cash flow to debt will decline by less than 0.5 percentage points. Overall, we expect that DT will post pro forma adjusted debt to EBITDA of 3.0x-3.2x...

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