S&P trims Speedcast Holdings III

S&P said it lowered its ratings on Speedcast Holdings III LLC and its senior secured debt to B- from B.

“The entrance of Starlink has created substantial pressure on the competitive environment and provides cruise customers with a strong alternative to service their needs. While Speedcast has renewed both contracts with its two largest customers in the cruise segment, we expect competition from Starlink will result in material changes to the economics of these customer relationships.

“We forecast that one of the contract renewals will result in lower volume with a slightly improved margin profile while the other contract renewal has led to reduced margins in 2023. We expect the increase in competitive pressure will reduce cruise segment revenue by a single-digit percentage in 2024,” S&P said in a statement.

The agency said it projects Speedcast’s free operating cash flow to debt to remain about break-even through 2024 as it starts to recognize the effect of renegotiated contracts with its large cruise partners.

The outlook is stable.

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