Score Motion: Moody’s affirms Telenet’s Ba3 CFR; steady outlook
World Credit score Analysis – 23 Dec 2020
London, 23 December 2020 — Moody’s Traders Service (“Moody’s”) has at this time affirmed Telenet Group Holding NV’s (Telenet) Ba3 company household score (CFR) and Ba3-PD chance of default score (PDR). Concurrently, Moody’s has affirmed the Ba3 instrument scores on the assured senior secured time period mortgage due 2029 and the assured senior secured revolving credit score facility due 2026 raised by Telenet Worldwide Finance S.ar.l., the assured senior secured time period mortgage due 2028 raised by Telenet Financing USD LLC, and the senior secured notes due 2028 issued by Telenet Finance Luxembourg Notes S.a r.l. The outlook of Telenet Group Holding NV, Telenet Worldwide Finance S.ar.l, Telenet Financing USD LLC, and Telenet Finance Luxembourg Notes S.a r.l. is steady.
Telenet’s Ba3 CFR displays (1) the corporate’s sturdy place within the total Belgian telecommunications market by way of its converged fixed-mobile providing, and its main broadband and video market shares within the Flanders area, (2) the aggressive advantages the corporate derives from its technologically superior cable networks, and (3) the corporate’s sturdy underlying money circulation technology pre-dividends though many of the extra money circulation will probably be distributed to shareholders.
Nonetheless, Telenet’s score stays constrained by (1) the corporate’s modest income and EBITDA development prospects reflecting the maturity of the Belgian telecom market and sustained decline in video and fixed-line telephony subscribers, (2) the regulation imposed on cable operators in Belgium to provide wholesale entry to their TV and broadband companies at regulated costs to various telecom service suppliers, and (3) Moody’s expectation that the corporate will proceed to handle its internet leverage (as reported by the corporate) at round 4.0x within the absence of fabric acquisitions, the mid-point of its 3.5x-4.5x internet leverage framework, which interprets right into a Moody’s adjusted gross leverage of round 4.5x.
Moody’s positively notes Telenet’s resilient efficiency in 2020 regardless of the difficult surroundings pushed by the coronavirus outbreak. On the Q3 2020 outcomes presentation, the corporate has guided for a broadly steady EBITDA (on a rebased foundation) in 2020 in comparison with prior yr and Moody’s expects modest rebased EBITDA development thereafter pushed by (1) modest value will increase, (2) good momentum in postpaid cellular and broadband internet provides partly offset by the sustained decline in video and fixed-line telephony subscribers, and (3) value financial savings from elevated digital transformation leading to decrease consumer-facing prices, together with retail.
Moody’s tasks that Telenet’s money circulation technology earlier than shareholder distributions will enhance over the following two years supported by modest EBITDA development, comparatively steady capital expenditures and decrease curiosity funds. Such an enchancment will accommodate the corporate’s just lately launched dividend flooring of EUR2.75 per share which can end in dividend funds of at the least EUR300 million each year.
The score company notes nevertheless that Telenet’s credit score profile is topic to occasion threat in 2021, together with a possible partnership with Belgian utility Fluvius to deploy fibre-to-the-home (FTTH) within the Flanders area. Moreover, the corporate publicly said its curiosity in buying Voo, a cable operator in Wallonia. Following the annulment of an settlement to promote a 51% stake in Voo to personal fairness agency Windfall in June 2020, the cable operator will seemingly be put on the market as soon as once more by way of a aggressive course of which Moody’s expects will increase the curiosity from Telenet and Orange Belgium (majority owned by Orange, Baa1 steady) and personal fairness funds. If any of those transactions had been to come back to fruition, Moody’s would assess their impression on Telenet’s enterprise profile and credit score metrics.
Telenet has a great liquidity profile. As of 30 September 2020, the corporate had EUR84 million in money and money equivalents. As well as, the corporate has entry to a EUR510 million RCF expiring in Could 2026 and EUR45 million of further liquidity below separate agreements with sure lenders, bringing the full liquidity buffer to EUR555 million on high of its money steadiness. Telenet advantages from a long-dated maturity profile for its financial institution services and bonds. Quick-term debt repayments primarily embody repayments below the seller financing program whereby maturities are lower than one yr upon incurrence. Drawdowns below the seller financing program amounted to EUR340.3 million as of 30 September 2020. In accordance with the senior secured credit score facility, Telenet is restricted by a monetary upkeep covenant (leverage ratio take a look at of internet whole debt/EBITDA at 6.0x to be examined when the RCF is 33.3% drawn), below which we might anticipate the corporate to take care of good capability always.
Telenet’s Ba3-PD PDR, is on the identical degree because the CFR, reflecting the anticipated restoration charge of fifty% that Moody’s usually assumes for a capital construction that consists of a mixture of financial institution debt and bonds. The senior secured on lending of the senior secured notes, issued by Telenet Worldwide Finance S.ar.l., establishes a declare place for the noteholders that’s broadly equal to that of the prevailing lenders below the Telenet senior secured financial institution credit score services. The senior secured financial institution credit score services and the senior secured notes are each rated Ba3, consistent with the CFR. The senior secured financial institution credit score services profit from first-ranking safety over shareholder loans into the Telenet group and over the shares of the debtors and guarantors, in addition to from upstream ensures from subsidiaries accounting for at the least 80% of group consolidated EBITDA (excluding EBITDA attributable to any three way partnership). Moody’s considers that safety packages consisting primarily of share pledges are comparatively weak and thus the score company ranks these services pari passu with different unsecured liabilities, together with commerce payables, lease rejection claims, pension obligations, handset financing liabilities, excellent deferred funds on the acquisition of 4G cellular spectrum and obligations past 20 years below the corporate’s clientele payment settlement.
Telenet’s steady score outlook displays Moody’s expectation that the corporate’s working efficiency will proceed to develop broadly consistent with its steering, supported by a rise in multiple-play, premium leisure and B2B penetration whereas sustaining internet leverage round 4.0x (as reported by the corporate).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
While thought of unlikely within the context of the corporate’s present monetary coverage, upward score stress might develop if (1) Telenet’s working efficiency is strong; (2) the corporate demonstrates a transparent dedication to sustaining its Moody’s-adjusted gross debt/EBITDA under 3.75x; and (3) the corporate’s Moody’s-adjusted money circulation from operations/gross debt will increase properly above 20%.
Downward score stress might come up if (1) the corporate’s Moody’s-adjusted gross debt/EBITDA exceeds 4.75x on a sustained foundation; (2) the corporate experiences a marked deterioration in its working efficiency; (3) the corporate’s Moody’s-adjusted money circulation from operations/debt falls under 15%; or (4) the corporate begins to generate unfavourable FCF (after capital spending and dividends) on a sustained foundation.
The principal methodology utilized in these scores was Telecommunications Service Suppliers revealed in January 2017 and accessible at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1055812. Alternatively, please see the Score Methodologies web page on www.moodys.com for a duplicate of this system.
Headquartered in Brussels, Belgium, Telenet is the biggest supplier of cable communications companies and, following the acquisition of BASE in 2016, the second-largest supplier of cellular companies (by way of SIMs) in Belgium. Telenet has been listed on the Euronext inventory change since 2005 and is majority-owned (58% on a completely diluted foundation) by Liberty World plc (Ba3 steady).
For additional specification of Moody’s key score assumptions and sensitivity evaluation, see the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure type. Moody’s Score Symbols and Definitions will be discovered at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For scores issued on a program, sequence, class/class of debt or safety this announcement supplies sure regulatory disclosures in relation to every score of a subsequently issued bond or be aware of the identical sequence, class/class of debt, safety or pursuant to a program for which the scores are derived solely from current scores in accordance with Moody’s score practices. For scores issued on a assist supplier, this announcement supplies sure regulatory disclosures in relation to the credit standing motion on the assist supplier and in relation to every specific credit standing motion for securities that derive their credit score scores from the assist supplier’s credit standing. For provisional scores, this announcement supplies sure regulatory disclosures in relation to the provisional score assigned, and in relation to a definitive score which may be assigned subsequent to the ultimate issuance of the debt, in every case the place the transaction construction and phrases haven’t modified previous to the task of the definitive score in a fashion that will have affected the score. For additional info please see the scores tab on the issuer/entity web page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit score assist from the first entity(ies) of this credit standing motion, and whose scores might change because of this credit standing motion, the related regulatory disclosures will probably be these of the guarantor entity. Exceptions to this method exist for the next disclosures, if relevant to jurisdiction: Ancillary Providers, Disclosure to rated entity, Disclosure from rated entity.
The scores have been disclosed to the rated entity or its designated agent(s) and issued with no modification ensuing from that disclosure.
These scores are solicited. Please check with Moody’s Coverage for Designating and Assigning Unsolicited Credit score Rankings accessible on its web site www.moodys.com.
Regulatory disclosures contained on this press launch apply to the credit standing and, if relevant, the associated score outlook or score assessment.
Moody’s common rules for assessing environmental, social and governance (ESG) dangers in our credit score evaluation will be discovered at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
Please see www.moodys.com for any updates on modifications to the lead score analyst and to the Moody’s authorized entity that has issued the score.
Please see the scores tab on the issuer/entity web page on www.moodys.com for added regulatory disclosures for every credit standing.
Sebastien Cieniewski VP - Senior Credit score Officer Company Finance Group Moody's Traders Service Ltd. One Canada Sq. Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Consumer Service: 44 20 7772 5454 Peter Firth Affiliate Managing Director Company Finance Group JOURNALISTS: 44 20 7772 5456 Consumer Service: 44 20 7772 5454 Releasing Workplace: Moody's Traders Service Ltd. One Canada Sq. Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Consumer Service: 44 20 7772 5454
© 2020 Moody’s Company, Moody’s Traders Service, Inc., Moody’s Analytics, Inc. and/or their licensors and associates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY’S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS,ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
MOODY’S CREDIT RATINGS,ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All info contained herein is obtained by MOODY’S from sources believed by it to be correct and dependable. Due to the opportunity of human or mechanical error in addition to different elements, nevertheless, all info contained herein is offered “AS IS” with out guarantee of any form. MOODY’S adopts all crucial measures in order that the knowledge it makes use of in assigning a credit standing is of enough high quality and from sources MOODY’S considers to be dependable together with, when applicable, impartial third-party sources. Nonetheless, MOODY’S shouldn’t be an auditor and can’t in each occasion independently confirm or validate info acquired within the score course of or in getting ready its Publications.
To the extent permitted by regulation, MOODY’S and its administrators, officers, staff, brokers, representatives, licensors and suppliers disclaim legal responsibility to any particular person or entity for any oblique, particular, consequential, or incidental losses or damages in any respect arising from or in reference to the knowledge contained herein or using or incapability to make use of any such info, even when MOODY’S or any of its administrators, officers, staff, brokers, representatives, licensors or suppliers is suggested upfront of the opportunity of such losses or damages, together with however not restricted to: (a) any lack of current or potential earnings or (b) any loss or harm arising the place the related monetary instrument shouldn’t be the topic of a selected credit standing assigned by MOODY’S.
To the extent permitted by regulation, MOODY’S and its administrators, officers, staff, brokers, representatives, licensors and suppliers disclaim legal responsibility for any direct or compensatory losses or damages precipitated to any particular person or entity, together with however not restricted to by any negligence (however excluding fraud, willful misconduct or some other kind of legal responsibility that, for the avoidance of doubt, by regulation can’t be excluded) on the a part of, or any contingency inside or past the management of, MOODY’S or any of its administrators, officers, staff, brokers, representatives, licensors or suppliers, arising from or in reference to the knowledge contained herein or using or incapability to make use of any such info.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Traders Service, Inc., a wholly-owned credit standing company subsidiary of Moody’s Company (“MCO”), hereby discloses that almost all issuers of debt securities (together with company and municipal bonds, debentures, notes and industrial paper) and most well-liked inventory rated by Moody’s Traders Service, Inc. have, previous to task of any credit standing, agreed to pay to Moody’s Traders Service, Inc. for credit score scores opinions and companies rendered by it charges starting from $1,000 to roughly $2,700,000. MCO and Moody’s traders Service additionally keep insurance policies and procedures to handle the independence of Moody’s Traders Service credit score scores and credit standing processes. Info concerning sure affiliations which will exist between administrators of MCO and rated entities, and between entities who maintain credit score scores from Moody’s Traders Service and have additionally publicly reported to the SEC an possession curiosity in MCO of greater than 5%, is posted yearly at www.moodys.com below the heading “Investor Relations — Company Governance — Director and Shareholder Affiliation Coverage.”
Further phrases for Australia solely: Any publication into Australia of this doc is pursuant to the Australian Monetary Providers License of MOODY’S affiliate, Moody’s Traders Service Pty Restricted ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as relevant). This doc is meant to be offered solely to “wholesale purchasers” inside the that means of part 761G of the Companies Act 2001. By persevering with to entry this doc from inside Australia, you symbolize to MOODY’S that you’re, or are accessing the doc as a consultant of, a “wholesale consumer” and that neither you nor the entity you symbolize will straight or not directly disseminate this doc or its contents to “retail purchasers” inside the that means of part 761G of the Companies Act 2001. MOODY’S credit standing is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the fairness securities of the issuer or any type of safety that’s accessible to retail traders.
Further phrases for Japan solely: Moody’s Japan Okay.Okay. (“MJKK”) is a wholly-owned credit standing company subsidiary of Moody’s Group Japan G.Okay., which is wholly-owned by Moody’s Abroad Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan Okay.Okay. (“MSFJ”) is a wholly-owned credit standing company subsidiary of MJKK. MSFJ shouldn’t be a Nationally Acknowledged Statistical Score Group (“NRSRO”). Subsequently, credit score scores assigned by MSFJ are Non-NRSRO Credit score Rankings. Non-NRSRO Credit score Rankings are assigned by an entity that isn’t a NRSRO and, consequently, the rated obligation is not going to qualify for sure varieties of therapy below U.S. legal guidelines. MJKK and MSFJ are credit standing businesses registered with the Japan Monetary Providers Company and their registration numbers are FSA Commissioner (Rankings) No. 2 and three respectively.
MJKK or MSFJ (as relevant) hereby disclose that almost all issuers of debt securities (together with company and municipal bonds, debentures, notes and industrial paper) and most well-liked inventory rated by MJKK or MSFJ (as relevant) have, previous to task of any credit standing, agreed to pay to MJKK or MSFJ (as relevant) for credit score scores opinions and companies rendered by it charges starting from JPY125,000 to roughly JPY250,000,000.
MJKK and MSFJ additionally keep insurance policies and procedures to handle Japanese regulatory necessities.