Fitch: Liquid Telecom bonds, loans B+/RR4

Fitch Ratings said it assigned Liquid Telecommunications Holdings Ltd. a long-term issuer default rating of B+ (EXP)/stable.

The agency also assigned an instrument rating of B+ (EXP)/RR4 to the company's proposed new senior secured bond and term loans.

Proceeds will be used to refinance the current capital structure.

Fitch said the B+ (EXP) rating reflects Liquid Telecom's robust business model with its unique fibre footprint offering cross-border telecommunication connectivity in southern, eastern and central Africa. Higher demand for data, storage and bandwidth represents future growth opportunities for Liquid Telecom's enterprises and wholesale data divisions.

The addition of Neotel's network in South Africa has enhanced Liquid Telecom's competitive position, the agency added.

“However, some unhedged FX exposure may lead to volatility in key credit metrics. Commitment to infrastructure investment as well as dividend distribution could weigh on its already weak free cash flow (FCF) profile over the next three years,” Fitch said in a news release.

“We believe there is moderate execution risk in turning around Neotel and generating sustainable enterprise revenue growth in a competitive operating environment.”

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