(Finance) – Fitch Ratings has confirmed the Long-Term Issuer Default Rating (IDR) of TelephoneSpanish telecommunications company, a “BBB” with a stable outlook.
The rating reflects the “strong market position” of the company in major domestic and international markets. Although it has limited leverage at its current rating, pre-dividend free cash flow generation “will likely remain strong and stable over the next three to four years,” despite the loss of an important wholesale contract in Germany.
According to Fitch, Telefonica will show “a weak organic capacity to reduce debt as full cash dividend payments resume.”
There generation of FCF will be supported by market consolidation in key markets, copper switch-off in Spain, continued cost optimization and potentially lower-than-expected capital expenditure.