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S&P revises TalkTalk view to positive
S&P said it revised the outlook on TalkTalk Telecom Group plc to positive from stable and affirmed its BB- long-term issuer credit rating. The positive outlook reflects the potential for an upgrade over the next 12 months if TalkTalk stabilizes its revenue base and significantly lowers its exceptional costs.
TalkTalk announced it reached an agreement to sell its FibreNation subsidiary to CityFibre Holdings for £200 million. The sale is expected to close in March.
The FibreNation sale will cut TalkTalk's leverage and improve its cash generation. The £200 million cash proceeds from the sale, nearly all of which will be used to repay debt, will reduce TalkTalk's S&P Global Ratings-adjusted debt to EBITDA by about 0.6x–0.7x, to about 3.5x–3.6x in FY2020 (ending March 31, 2020), compared with 4.2x in FY2019. “We also note that FibreNation's projected capex is £22 million in FY2020 and its operating expenditure (opex) is about £3 million-£4 million,” said S&P in a press release.
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