Fitch revises TalkTalk view to negative

Fitch Ratings said it revised TalkTalk Telecom Group plc's outlook to negative from stable while affirming the long-term issuer default rating at BB-.

The negative outlook reflects that funds from operations adjusted net leverage is likely to exceed Fitch's downgrade threshold in fiscal year 2019 while organic deleveraging capacity remains constrained by weak margins, exceptional costs and investment requirements and susceptible to competitive market dynamics and execution risks, the agency explained.

TalkTalk's key performance indicators depict an improving revenue picture and increasing subscriber base stability; however, leverage is unlikely to sustainably improve to within the rating's threshold on an organic basis unless the company continues to make progress in realigning its cost structure, Fitch added.

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