{"id":39390,"date":"2013-06-05T11:57:51","date_gmt":"2013-06-05T09:57:51","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=39390"},"modified":"2013-06-05T12:18:34","modified_gmt":"2013-06-05T10:18:34","slug":"mtn-hit-with-fitch-downgrade","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/mobile\/39390\/mtn-hit-with-fitch-downgrade\/","title":{"rendered":"MTN hit with Fitch downgrade"},"content":{"rendered":"

Fitch Ratings<\/a> has downgraded MTN<\/a>‘s National Long-Term Rating to ‘AA-(zaf)’ from ‘AA(zaf)’ citing\u00a0the group’s heightened business risk profile as a result of its growing reliance on cash generated from weak non-investment grade countries.<\/p>\n

In noon trade on Wednesday (5 June) shares in MTN declined R2.55 or 1.45% to R173.20 on the JSE, some way off its 52 week best of R185.90. The All Share Index meanwhile traded 0.25% lower to\u00a040,795 points.<\/p>\n

The outlook is stable, the ratings group said, while also affirming MTN’s National Short-Term Rating at ‘F1+(zaf)’.<\/p>\n

Fitch also affirmed MTN Holdings senior unsecured debt rating at ‘AA-(zaf)’.<\/p>\n

Thew ratings group said that the Stable Outlook reflects MTN”s on-going strong cash generation and conservative leverage metrics.<\/p>\n

Fitch said it expects MTN’s fund from operations (FFO) lease-adjusted leverage to trend at or below 1.5x over the short to medium term. “In addition\u201a we also project pre-dividend free cash flow to sales to improve following two years of network investment in Nigeria and trending higher than 8% over the short to medium term”.<\/p>\n

This, it said, provides MTN with an adequate level of financial flexibility to enable the group to spend on network quality and coverage and thus retain its all-important leading market shares\u201a Fitch said.<\/p>\n

It further pointed out that MTN’s business risk profile is heightened through its operational exposure to non-investment grade countries.<\/p>\n

In particular the group’s largest contributor of cash flow is Nigeria (‘BB-‘\/Stable)\u201a which comprises 38% of consolidated Ebitda. “While such countries typically have good mobile prospects given low mobile penetration rates and non-existent fixed line infrastructure\u201a the operations are susceptible to political instability and unpredictable regulatory authorities,” Fitch said.<\/p>\n

African\u00a0markets maturing<\/strong><\/p>\n

The ratings group said that with mobile penetration rates in South Africa now well in excess of 100% in addition to intensifying competition\u201a the slowdown in the group’s South African operations will place increasing reliance on cash flow growth from non-South African operations to service debt at the Holding Company (HoldCo) level.<\/p>\n

“Fitch expect some in-market consolidation to occur in markets such as South Africa\u201a but also across the continent\u201a over the next three years. However\u201a given the uncertain timing\u201a we will treat this M&A risk on an event basis\u201a\u201d it said.<\/p>\n

More on MTN<\/strong><\/p>\n

MTN sugarcoats Myanmar application<\/strong><\/a><\/p>\n

MTN could spend R71bn on acquisition: CEO<\/strong><\/a><\/p>\n

Analysts question MTN leadership<\/strong><\/a><\/p>\n

Phuthuma Nhleko rejoins MTN<\/strong><\/a><\/p>\n

MTN courting India acquisition: report<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Fitch Ratings has downgraded MTN’s National Long-Term Rating to ‘AA-(zaf)’ from ‘AA(zaf)’ citing the group’s heightened business risk profile.<\/p>\n","protected":false},"author":10,"featured_media":8881,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[2510,26,28],"class_list":["post-39390","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mobile","tag-fitch","tag-headline","tag-mtn"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/39390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=39390"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/39390\/revisions"}],"predecessor-version":[{"id":39394,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/39390\/revisions\/39394"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/8881"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=39390"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=39390"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=39390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}