Moody's Affirms MTN Debt Rating, Changes Outlook to Stable
Published on: 16th Dec 2013
By: Ian Mansfield
Moody's Investors Service has affirmed the issuer rating of MTN Group to Baa2 and national scale rating at A1.za. Concurrently Moody's has changed the outlook to stable from positive.
"Today's change in outlook to stable from positive predominately reflects MTN's increasing exposure to riskier markets which is tempering any possible upward rating pressure, despite MTN's strong and stable consolidated credit metrics over the past few years." says Dion Bate, Vice president- Senior Analyst. "MTN's exposure to the risks within the political, social, regulatory and economic environments in the key countries in which it operates such as South Africa (Baa1/negative) and Nigeria (Ba3/stable) are important drivers for MTN's ratings (Baa2/stable)", says Mr Bate.
Other contributing developments to stabilising the outlook include: (1) regulatory challenges across various markets; (2) litigation and cash flow constraints associated with its Iran operations, MTN's third largest contributor to earnings before interest, tax, depreciation and amortization (EBITDA); and (3) competitive pressures across its key markets, although we view MTN's dominant market positions as a mitigating factor to withstand such pressures.
The stable outlook reflects Moody's expectation that MTN's credit profile will continue to remain strong supported by subscriber and top-line growth trends in most of its markets. Furthermore, the outlook assumes MTN's continued ability to upstream the majority of its cash flows and that its liquidity profile at group and subsidiary levels remains prudently managed.