S&P turns Eircom view to stable

S&P said it changed its outlook for Eircom Holdings (Ireland) Ltd. to stable from positive and affirmed its B+ ratings.

“Eircom is selling a 49.9% minority stake in its core fixed network to Infravia in a bid to accelerate fiber and fiber-to-the-home (FTTH) deployment across its footprints to about 1.9 million premises by 2027. Eircom's halved economic ownership in its fixed network is somewhat dilutive to its credit profile in our view, although we are also mindful that Eircom keeps a controlling stake in the joint venture,” S&P said in a press release.

The agency said it considers Eircom’s financial policy to be aggressive because it expects the company to distribute most of the proceeds to its shareholders, but noted the effect of the transaction on ratios is not materially negative.

“The stable outlook reflects our expectation that Eircom will maintain S&P Global Ratings-adjusted debt to EBITDA of 4.5x-5.5x with sound positive free operating cash flow (FOCF) after leases,” S&P said.

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