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S&P trims TalkTalk
S&P said it lowered its ratings on TalkTalk Telecom Group Ltd. and its senior notes to B- from B.
“TalkTalk's operating underperformance should result in an increase in adjusted leverage to about 7.7x (before the IFRS 16 EAD lease adjustment), significantly above our 6.5x downside threshold. During the first half of fiscal 2023, TalkTalk increased its headline revenue by 2%, including the contribution from the Virtual 1 acquisition, while headline EBITDA declined by 4%,” the agency said in a press release.
S&P said it sees an improvement in cash flow in fiscal 2024 to be partly offset by TalkTalk's upcoming refinancing. “We expect that TalkTalk will be able to generate breakeven FOCF after leases in fiscal 2023 and £10 million-£20 million in fiscal 2024, before any interest payments to the holding company where the payment-in-kind (PIK) toggle instrument is held. The improved supplier payment terms that TalkTalk has secured will likely help improve FOCF in the same years.”
The outlook is stable.
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