Research Update: Telekom Austria Upgraded To 'BBB+' On Solid Performance And Expectation Of Deleveraging; Outlook Stable

Telekom Austria has posted a sound operating track record over the past two years, both in Austria and increasingly also in many of its Central and Eastern European (CEE) markets. We believe that the company's increasingly robust free operating cash flows (FOCF) and financial policy track record will translate into steady organic deleveraging in the next two years. We consider that the risk of material debt-funded acquisitions has decreased, and that management is prioritizing strengthening its balance sheet. We are therefore raising our long-term issuer credit rating on Telekom Austria to 'BBB+' from 'BBB' and affirming our 'A-2' short-term rating. The stable outlook reflects our view that the company's S&P Global Ratings-adjusted ratio of debt to EBITDA will fall comfortably

...- Telekom Austria has posted a sound operating track record over the past two years, both in Austria and increasingly also in many of its Central and Eastern European (CEE) markets. - We believe that the company's increasingly robust free operating cash flows (FOCF) and financial policy track record will translate into steady organic deleveraging in the next two years. - We consider that the risk of material debt-funded acquisitions has decreased, and that management is prioritizing strengthening its balance sheet. - We are therefore raising our long-term issuer credit rating on Telekom Austria to '###+' from '###' and affirming our 'A-2' short-term rating. - The stable outlook reflects our view that the company's S&P Global Ratings-adjusted ratio of debt to EBITDA will fall comfortably below 2.5x by 2021, while funds from operations (FFO) to debt and FOCF (excluding spectrum investments) to debt will strengthen to 35%-40% and toward 15%, respectively....

Research Update