(Tiper Stock Exchange) – Moody’s confirmed RAI’s Baa3 long-term issuer rating – Italian radio and television and the Baa3 senior unsecured rating. At the same time, Moody’s confirmed Rai’s Ba1 Baseline Credit Assessment (BCA). The outlook remains negative and reflects the high correlation with the Italian government’s outlook and Moody’s expectation of a deterioration in the company’s key credit metrics in 2023-2024 following the implementation of the investment plan.
Rai’s Baa3 rating reflects: the company’s leading audience share and its deep-rooted position in Italian society; the large portion of its revenues generated through the collection of an annual fee; L’weakening of strategy and financial metrics performance, underscored by a low and declining EBIDA margin; low liquidity which speaks of a relatively weak financial strategy.
The regulatory framework in which Rai operates is stable and provides for high predictability of revenues, given that 68% of the company’s revenues derive from the annual license fee. However, this also generates a lack of revenue flexibility that acts as a constraint in inflationary environments. While discussions on the 2023-2028 service contract were delayed by the change of government in late 2022, the concession contract runs until 2027 and provides clarity to Rai for its annual budgets.
Moody’s estimates that i revenues operating costs of Rai remained substantially stable in 2022 at around 2.7 billion euros, driven by higher license fees and offset by lower advertising revenues. THE costs have increased due to rising energy costs, generalized inflation and the increase in premium sports expenditures, leading to a decrease in the operating margin to around 0.4% in 2022 from 2.1% in 2021. The rating agency expects Rai to increase the financial leverage total in 2022 at 994 million euros (2021: 817 million euros) with adjusted operating payables/income up 0.37x (0.31x in 2021).
Moody’s expects one revenue recovery in 2023 at levels substantially in line with 2019, driven by growth at a “mid-single digit” rate in both advertising revenue and license fee growth. However, running big investments in contentalso for the Euro Cup and the Olympics, will weigh on Rai’s financial leverage until 2023.
There liquid assets della Rai remains scarce with a cash balance of €171m as of H1 2022 and €320m available under its revolving credit facility. The company also has uncommitted credit lines for a total of 410 million euros.