Moody's changes BT outlook to negative

Moody's Investors Service said it changed the outlook on British Telecommunications plc and EE Ltd. to negative from stable. Concurrently Moody's affirmed British Telecommunication's Baa2 senior unsecured and issuer ratings rating and EE's Baa2 issuer rating.

The change of outlook to negative reflects Moody's forecasts for BT's revenues to remain under pressure in the fiscal year ending March 31, and FY 2021 driven by intense competition and regulatory changes affecting the consumer division and the structural decline of the company's enterprise segment. In addition, the agency expects adjusted gross leverage (as adjusted by Moody's mainly for the pension deficit) to remain above the triggers set for a Baa2 rating at 3.5x over the next two years due to the pressure on revenues and the upcoming spectrum auction.

Moody’s also cited the execution risk related to a potential acceleration of the fibre rollout in terms of costs and capital spending although Moody's considers increased investment important to enhance the company's product offering and partly to fend off increasing competition from competitors, according to Sebastien Cieniewski, Moody's lead analyst for BT.

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