Fitch assigns Virgin Media Ireland B+

Fitch Ratings said it assigned Virgin Media Ireland Ltd. an expected long-term issuer default rating of B+ with a stable outlook. The agency also gave expected BB/RR2 ratings to VMI's senior secured €900 million term loan.

“The rating reflects VMI's high leverage relative to investment-grade telecom peers' and much higher share of advertising revenues from free-to-air (FTA) channel Virgin Media One. It also factors in VMI's weak position in mobile compared with BB- rated peers' and highly competitive fixed and mobile markets,” Fitch said in a press release.

“Rating strengths are VMI's leading cable position in Ireland, a sound operating profile with a converged product offering and a strong EBITDA margin. As the company has been carved out of the consolidated reporting entity Virgin Media Inc. (BB-/stable), our analysis is based on a limited history of audited financial accounts for VMI up to 2019,” the agency said.

The outlook reflects expectations VMI’s owner Liberty Global will keep leverage at around 5x net debt/EBITDA, as reported by the company, an approach consistent with some of their other assets. “We expect Fitch-defined funds from operations (FFO) net leverage to be maintained around 5.2x, which is consistent with a B+ rating,” the agency said.

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