S&P removes Valentia from positive watch

Standard & Poor's said it affirmed its ratings on Valentia Telecommunications upc and related entities, including its BB+ corporate credit rating, BB- senior unsecured debt rating and eircom Funding upc's BB- subordinated debt rating.

All ratings have been removed from CreditWatch with positive implications, where they were placed on Nov. 9 based on information that Swisscom AG had entered into discussions with Valentia's owner eircom Group plc in relation to a possible buyout.

The outlook is stable.

The rating action reflects the removal of any immediate uplift in credit quality following the cancellation of the takeover bid, at least in the near term, following statements by the Swiss government (Swisscom's majority shareholder) that the company should not pursue acquisitions of foreign telecommunication companies with a public service mandate, the agency said.

The ratings on Valentia reflect its aggressive financial policy, the competitive threat of alternative access technologies, the group's tightly regulated tariffs and the changing revenue mix of the fixed-line segment, the agency said.

S&P also said the ratings benefit from Valentia's investment-grade business risk profile, enhanced by its strong market position in the fixed-line segment, and consequent sustained profitability. Very high access-line market share remains the most important credit positive for eircom, in light of voice traffic revenue pressure.

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