Research Update: Danish Telecom Network Operator DKT Holdings ApS (TDC) Affirmed At 'B' On Delayed Peak In Leverage; Outlook Stable

We expect that the decline in Danish telecommunications network operator TDC A/S's revenues will gradually slow down and flatten by year-end 2022, as large investments translate into growth opportunities in mobile and fiber. We therefore forecast stable S&P Global Ratings-adjusted EBITDA in 2021 and 2022. We expect that TDC will have higher capital expenditure (capex) and larger working capital outflows in 2021, following capex delays and favorable working capital movements in 2020. As a result, we expect significantly negative free operating cash flow in 2021 instead of 2020. At the same time, TDC's leverage was stronger than we expected in 2020, at 5.9x. It should peak at about 6.5x-6.6x in 2021 and 2022, or 9.8x-10.2x including shareholder loans, but remain

...- We expect that the decline in Danish telecommunications network operator TDC A/S's revenues will gradually slow down and flatten by year-end 2022, as large investments translate into growth opportunities in mobile and fiber. We therefore forecast stable S&P Global Ratings-adjusted EBITDA in 2021 and 2022. - We expect that TDC will have higher capital expenditure (capex) and larger working capital outflows in 2021, following capex delays and favorable working capital movements in 2020. As a result, we expect significantly negative free operating cash flow in 2021 instead of 2020. - At the same time, TDC's leverage was stronger than we expected in 2020, at 5.9x. It should peak at about 6.5x-6.6x in 2021 and 2022, or 9.8x-10.2x including shareholder loans, but remain commensurate with the rating. - We are therefore affirming our 'B' long-term issuer credit rating on TDC's parent, DKT Holdings ApS. We are also affirming our 'B+' issue rating on the notes and term loans issued by TDC and our...

Research Update