Fitch lowers Batelco view to negative

Fitch Ratings said it changed Bahrain Telecommunications Co.’s (Batelco) outlook to negative from stable and affirmed its long-term issuer default rating at BBB-.

Fitch also said it affirmed the unsecured rating of Batelco International Finance No. 1 Ltd. at BBB-.

This outlook revision follows the revision of the outlook on the sovereign rating of Bahrain to negative from stable and the affirmation of its long-term foreign-currency issuer default rating at BBB- and local-currency issuer default rating at BBB.

The ratings are notched up a level from the company’s BB+ standalone rating for government support, in case of need, Fitch said.

Although Batelco’s financial profile remains strong and the domestic operating environment is improving, the current standalone-rating level takes into account the political and economic risk of the countries its international operations are in, the agency said.

The domestic market remains core to Batelco’s earnings although its share of EBITDA fell to 46% in 2014 from 60% in 2012, Fitch said.

The agency said it views Batelco’s financial profile as strong, underpinned by an expectation of a conservative leverage profile, strong cash flow generation and sound liquidity profile over the medium term.

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