Research Update: Telekom Austria AG 'BBB+/A-2 Ratings Affirmed; Outlook Stable

We have recently lowered our ratings on Telekom Austria's 51% shareholder, America Movil S.A.B. de C.V. (AMX; BBB+/Negative/--). At the same time, we have reassessed our view of Telekom Austria AG's position and relationship with the AMX group, and determined that a somewhat lower rating on the latter is unlikely to affect the former. We forecast resilient operating performance despite the current COVID-19 pandemic and expect some credit improvements into 2020, supported by management's prudent policy. We are therefore affirming our 'BBB+' long-term and 'A-2' short-term issuer credit ratings on Telekom Austria. The stable outlook reflects our view that S&P Global Ratings-adjusted debt to EBITDA, funds from operations (FFO) to debt, and free operating cash flow (FOCF; excluding spectrum investments)

...- We have recently lowered our ratings on Telekom Austria's 51% shareholder, America Movil S.A.B. de C.V. (AMX; ###+/Negative/--). - At the same time, we have reassessed our view of Telekom Austria AG's position and relationship with the AMX group, and determined that a somewhat lower rating on the latter is unlikely to affect the former. - We forecast resilient operating performance despite the current COVID-19 pandemic and expect some credit improvements into 2020, supported by management's prudent policy. - We are therefore affirming our '###+' long-term and 'A-2' short-term issuer credit ratings on Telekom Austria. - The stable outlook reflects our view that S&P Global Ratings-adjusted debt to EBITDA, funds from operations (FFO) to debt, and free operating cash flow (FOCF; excluding spectrum investments) to debt will be sustained at comfortably below 2.5x, more than 35%, and about 15%....

Research Update