S&P moves Swisscom outlook to positive

S&P said it changed its outlook on Swisscom to positive from stable and affirmed its A issuer rating.

“Swisscom has been improving its credit metrics through cost control and debt repayment and we forecast further improvement. Swisscom's adjusted debt to EBITDA had reduced from about 2.2x historically to about 1.8x in 2022. While this improvement was partly driven by the reduction in the pension deficit, it was also supported by proactive debt repayment reflecting a more conservative financial policy.

“We expect further reduction in leverage to about 1.6x in 2023 thanks to EBITDA growth, supported by revenue growth in Italy and tight cost management in Switzerland, combined with the reduction in net debt as we expect Swisscom to generate about Swiss franc (CHF)300 million of cash flows after dividends and lease payments in 2023 and more than CHF 350 million in 2024,” S&P said in a press release.

The agency noted an upgrade is possible in the coming 24 months “if Swisscom maintains its S&P Global Ratings-adjusted debt to EBITDA materially below 2x and increases its free cash flow to debt to more than 20%, in line with our base case.”

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