Research Update: Cable And Telecom Firm SFR Rating Lowered To 'B' After Downgrade Of Parent Company Altice; Outlook Stable

Cable and telecommunications holding company Altice N.V.'s attempt to cut debt and turn around operations in France will hinge on the group stabilizing customer churn, committing to its financial policy targets, and monetizing heavy committed content costs. We forecast negative free operating cash flow (FOCF) of about €800 million in 2018 and only break-even levels in 2019, as well as adjusted debt to EBITDA remaining higher than 6x in 2018-2019 excluding asset disposals, at Altice N.V. We are therefore lowering to 'B' from 'B+' our long-term ratings on SFR Group S.A., following the downgrade of parent company Altice N.V. and removing the ratings from CreditWatch. The outlook is stable, reflecting our view that management has re-established firmer control over the

...+ Cable and telecommunications holding company Altice N.V.'s attempt to cut debt and turn around operations in France will hinge on the group stabilizing customer churn, committing to its financial policy targets, and monetizing heavy committed content costs. + We forecast negative free operating cash flow (FOCF) of about 800 million in 2018 and only break-even levels in 2019, as well as adjusted debt to EBITDA remaining higher than 6x in 2018-2019 excluding asset disposals, at Altice N.V. + We are therefore lowering to 'B' from 'B+' our long-term ratings on SFR Group S.A., following the downgrade of parent company Altice N.V. and removing the ratings from CreditWatch. + The outlook is stable, reflecting our view that management has re-established firmer control over the French operations, that FOCF will break even in 2019, and that the planned disposal proceeds will reduce reported debt, improving Altice's refinancing conditions....

Research Update