Moody’s rates Liquid Telecom, notes Ba3

Moody's Investors Service said it assigned a Ba3 corporate family rating and Ba3-PD probability of default rating to Liquid Telecommunications Holdings Ltd.

At the same time, the agency assigned a Ba3 rating with a loss given default (LGD) assessment of LGD3 to the proposed $600 million senior secured notes issued by Liquid Telecommunications Financing plc, a wholly owned subsidiary of Liquid Telecom.

Proceeds will be used to repay existing debt.

The outlook is stable.

"The Ba3 corporate family rating reflects Liquid Telecoms strong market position as the largest pan African fibre network across 13 central, eastern and southern African countries that gives it a clear competitive advantage," Moody's vice president and senior analyst Dion Bate said in a news release.

"The recent acquisition of Neotel gives Liquid Telecom access to a complementary fibre network in South Africa, valuable spectrum suited to building both 4G/LTE and future 5G networks and an established enterprise customer base. However, the much-needed investment into Neotel's network will result in negative free cash flow and adjusted gross debt/EBITDA above 3.5x over the next 2 years before reducing."

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