S&P: Cell C on negative watch

Standard & Poor’s said it placed the B- long-term corporate credit rating on Cell C (Pty) Ltd. on CreditWatch with negative implications.

The agency also said it placed the B- rating on the company’s senior secured debt and CCC ratings on its subordinated debt on CreditWatch negative. The recovery ratings on these debt instruments are unchanged.

The CreditWatch placement reflects a view that Cell C will need to secure funding within the next month to address a July 1 unsecured debt maturity of about 2 billion in South African rand.

The company has a successful track record of financing its capital-spending program and debt maturities with external funding and support from its parent, Oger Telecom, S&P said.

If the company successfully raises external financing, the agency said it will resolve the CreditWatch.

But in the absence of securing longer-term funding and achieving break-even free operating cash flow, S&P said it expects that the company’s liquidity will remain weak or less-than-adequate.

The company’s business risk profile is primarily constrained by its relatively weak market position as the No. 3 operator in South Africa’s mature four-player mobile telephony market, the agency added.

The ratings also reflect Cell C’s established brand, improving network quality and customer growth, S&P said.

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