S&P rates eircom notes B+

S&P said it affirmed the B+ ratings on eircom Holdings (Ireland) Ltd. and its existing senior secured debt.

The agency also said it assigned a B+ rating to the company's proposed senior secured instruments.

eircom plans to issue €850 million of debt, through subsidiaries eircom Finco and eircom Finance, to pay a €300 million dividend to shareholders and refinance the outstanding bond.

Although this debt issue will result in higher adjusted leverage, it will be mitigated by eircom's stronger-than-expected operating performance in 2018, stemming from ongoing cost optimization and an improving subscriber mix, S&P said.

These strengths are partly offset by the fierce competition inherent to Ireland's fragmented telecom market, with four fixed-line and three mobile players in a relatively small market of 1.8 million households, S&P said.

The stable outlook reflects the group's focus on streamlining its operations and cost structure, while investing in its networks to gain subscribers and market shares, partly offset by higher leverage after the proposed dividend recapitalization, the agency said.

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