S&P Global Ratings has lowered its rating on Cell C to SD (selective default) from CCC.<\/p>\n
The downgrade comes after Cell C renegotiated the terms of certain aspects of its debt, with the backing of the applicable lenders.<\/p>\n
S&P said that while no conventional payment or legal default event has occurred to date, it views the repayment profile restructuring as a distressed exchange.<\/p>\n
This, the ratings firm said, is tantamount to selective default given Cell C\u2019s weak liquidity position.<\/p>\n
\u201cFurthermore, because the schedule of agreed repayments has slowed, we believe lenders will receive less value than the promise of the original agreement,\u201d S&P said.<\/p>\n
\u201cWe also believe there was a realistic possibility of a conventional payment default before the exchange, given the company\u2019s weak liquidity position.\u201d<\/p>\n
Cell C said the recapitalisation and other related transactions will improve its liquidity and long-term competitiveness.<\/p>\n
\u201cThe related measures will improve the efficiency of Cell C\u2019s network, while decreasing capital expenditure,\u201d it said.<\/p>\n
In parallel, Cell C is implementing operational efficiency measures including leveraging its existing roaming agreement and right-sizing the business to remove inefficient costs.<\/p>\n
This includes redirecting resources to revenue generating activities which will help to \u201cposition Cell C within the rapidly changing competitive environment in the mobile telecommunications industry\u201d.<\/p>\n
\u201cIn line with international trends, we are actively pursuing ways to leverage our existing roaming agreement,\u201d said Cell C chief executive officer, Douglas Craigie Stevenson.<\/p>\n
He added that they are looking at network synergy and consolidation to ensure that Cell C remains a competitive player with improved network access and quality.<\/p>\n