TEXT-Fitch revises Telefonica's outlook to negative
June 8Fitch Rankings has modified the Outlook on Telefonica SA's
Lengthy-term Company Default Rating¡¡to Negative from Stable and
confirmed the IDR at 'BBB+.' Simultaneously, the company has confirmed the senior
unsecured rating from the bonds released by Telefonica Europe BV to 'BBB+' and
Telefonica Finance USA LLC's preference shares to 'BB+'. The company nike free run 2 has confirmed
Telefonica's Short-term IDR at 'F2'.
The Negative Outlook reflects the continuing weakness in important underlying
marketplaces for example The country, the United kingdom and Eastern Europe. This really is partly offset by
is a result of Latam. In connection with this, Fitch's rating situation presumptions on growth
tend to be more conservative than management predictions. Additionally, Fitch positively
notes efforts to lessen leverage through changes towards the distribution policy
and nike free run from resource sales. However, lots nike free run of uncertainty remains round the timing of
these sales along with the possibility of further and sustained macro weakness
across Europe but specifically in The country. Fitch needs Telefonica to handle
these risks inside the limitations from the agency's rating recommendations for any
downgrade and then any signs the group is not able to do this can lead to further
negative rating action.
Fitch observe that actions introduced by the organization a week ago, together with a second
scrip dividend and resource disposals, send an essential message when it comes to the
company's readiness and determination to safeguard credit metrics. However,
Fitch views additionally they read the degree that management no more
needs the breadth and diversity from the business to create the organic
deleveraging which was formerly expected.
Within this context, Telefonica's unadjusted internet debt to EBITDA target of two.35x for
YE12 might not be met. The ratio was at 2.55x at Q112. Telefonica's FFO internet
leverage¡¡was at 3.4x
at YE11 and it is high in accordance with its European peers. A fabric decrease in this
metric, trending towards 3.0x and below, will become important when it comes to
maintaining rankings in the current level. A metric likely to remain
consistently above 3.0x will probably result in a downgrade.
Fitch views the believed EUR3.2bn of money savings over 2012/2013 through
scrip returns, and what could add up to multi-billion euro resource sales, to become
useful when it comes to the business's need to reduce its overall internet debt
position. The precise character, value and timing of resource sales remains unclear and
execution risk is going to be present until disposals are completed. Potential
possession dilution in core assets to cherry2012702 under 60% could cause Fitch to reflect on
the foundation of consolidation in the present position of full consolidation of
this entity to 1 of proportionate EBITDA consolidation. Under current rating
situation presumptions, in isolation, this is relatively neutral towards the rating
but may pressure the rankings when coupled with further weakness in underlying
business or delays in resource sales.
Forecast pre-dividend free income margin is anticipated to become compressed because of
operating conditions and spectrum investment, using the latter prone to remain
high through 2013. This metric was at 13.4% this year, that is strong for that
rankings. Because of the demands talked about, Fitch accepts the metric may fall under
high single digit territory within the next 2 yrs, although would expect a
metric above 9% to be able to keep up with the current rankings.
The expectation that 2012 and 2013 debt maturities are fully covered from
existing cash and unused bank lines is implicit in the present rating and
Outlook. However, Fitch notes that the material degeneration within the The spanish language
sovereign situation may lead to unpredicted shortfalls when it comes to available
bank lines or perhaps an capability to access short-term Clubpenguin. This might pressure the
current solid liquidity position and may likely lead to further negative
rating action.
Contact:
Primary Analyst
Stuart Reid
Senior Director
+44 20 3530 1085
Fitch Rankings Limited
30 North Colonnade
London E14 5GN
Secondary Analyst
Michael Dunning
Controlling Director
+44 20 3530 1385
Committee Chairperson
Nikolai Lukashevich
Senior Director
+7 495 956 9968
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email:
[email protected].
More information can be obtained on world wide web.fitchratings.com. The rankings above
were solicited by, or with respect to, the company, and for nike free run that reason, Fitch continues to be
paid out for that provision from the rankings.
Relevant criteria, 'Corporate Rating Methodology', dated 12 August 2011 and
'Rating Global Telecom Companies' dated 16 September 2010 can be found at
world wide web.fitchratings.com.
Relevant Criteria and Related Research:
Corporate Rating Methodology
Rating Global Telecommunications CompaniesSector Credit FactorsTEXT-Fitch revises Telefonica's outlook to negative
June 8Fitch Rankings has modified the Outlook on Telefonica SA's
Lengthy-term Company Default Rating¡¡to Negative from Stable and
confirmed the IDR at 'BBB+.' Simultaneously, the company has confirmed the senior
unsecured rating from the bonds released by Telefonica Europe BV to 'BBB+' and
Telefonica Finance USA billige nike free run LLC's preference shares to 'BB+'. The company has confirmed
Telefonica's Short-term IDR at 'F2'.
The Negative Outlook reflects the continuing weakness in important underlying
marketplaces for example The country, the United kingdom and Eastern Europe. This really is partly offset by
is a result of Latam. In connection with this, Fitch's rating situation presumptions on growth
tend to be more conservative than management predictions. Additionally, Fitch positively
notes efforts to lessen leverage through changes towards the distribution policy
and from resource sales. However, lots of uncertainty remains round the timing of
these sales along with the possibility of further and sustained macro weakness
across Europe but specifically in The country. Fitch needs Telefonica to handle
these risks inside the limitations from the agency's rating recommendations for any
downgrade and then any signs the group is not able to do this can lead to further
negative rating action.
Fitch observe that actions introduced by the organization a week ago, together with a second
scrip dividend and resource disposals, send an essential message when it comes to the
company's readiness and determination to safeguard credit metrics. However,
Fitch views additionally they read the degree that management no more
needs the breadth and diversity from the business to create the organic
deleveraging which was formerly expected.
Within this context, Telefonica's unadjusted internet debt to EBITDA target of two.35x for
YE12 might not be met. The ratio was at 2.55x at Q112. Telefonica's FFO internet
leverage¡¡was at 3.4x
at YE11 and it is high in accordance with its European peers. A fabric decrease in this
metric, trending towards 3.0x and below, will become important when it comes to
maintaining rankings in the current level. A metric likely to remain
consistently above 3.0x will probably result in a downgrade.
Fitch views the believed EUR3.2bn of money savings over 2012/2013 through
scrip returns, and what could add up to multi-billion euro resource sales, to become
useful when it comes to the business's need to reduce its overall internet debt
position. The precise character, value and timing of resource sales remains unclear and
execution risk is going to be present until disposals are completed. nike free run Potential
possession dilution in core assets to under 60% could cause Fitch to reflect on
the foundation of consolidation in the present nike free run position of full consolidation of
this entity to 1 of proportionate EBITDA consolidation. Under current rating
situation presumptions, in isolation, this is relatively neutral towards the rating
but may pressure the rankings when coupled with further weakness in underlying
business or delays in resource sales.
Forecast pre-dividend free income margin is anticipated to become compressed because of
operating conditions and spectrum investment, using the latter prone to remain
high through 2013. This metric was at 13.4% this year, that is strong for that
rankings. Because of the demands talked about, Fitch accepts the metric may fall under
high single digit territory within the next 2 yrs, although would expect a
metric above 9% to be able to keep up with the current rankings.
The expectation that 2012 and 2013 debt maturities are fully nike free run covered from
existing cash cherry2012702 and unused bank lines is implicit in the present rating and
Outlook. However, Fitch notes that the material degeneration within the The spanish language
sovereign situation may lead to unpredicted shortfalls when it comes to available
bank lines or perhaps an capability to access short-term Clubpenguin. This might pressure the
current solid liquidity position and may likely lead to further negative
rating action.
Contact:
Primary Analyst
Stuart Reid
Senior Director
+44 20 3530 1085
Fitch Rankings Limited
30 North Colonnade
London E14 5GN
Secondary Analyst
Michael Dunning
Controlling Director
+44 20 3530 1385
Committee Chairperson
Nikolai Lukashevich
Senior Director
+7 495 956 9968
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email:
[email protected].
More information can be obtained on world wide web.fitchratings.com. The rankings above
were solicited by, or with respect to, the company, and for that reason, Fitch continues to be
paid out for that provision from the rankings.
Relevant criteria, 'Corporate Rating Methodology', dated 12 August 2011 and
'Rating Global Telecom Companies' dated 16 September 2010 can be found at
world wide web.fitchratings.com.
Relevant Criteria and Related Research:
Corporate Rating Methodology
Rating Global Telecommunications CompaniesSector Credit Factors
