Moody's ups France Telecom

Moody's Investors Service said it upgraded France Telecom SA's long-term debt ratings to Baa2 from Baa3 with a positive outlook and its short-term debt ratings to Prime-2 from Prime-3, with a stable outlook.

The long-term debt ratings of France Telecom's subsidiary, Orange plc, 100% owned by France Telecom's 99.2% owned subsidiary Orange SA, were upgraded to Baa1 from Baa3. Orange plc's rating has a stable outlook.

Moody's said a key consideration for the upgrade was France Telecom's impressive debt reduction of €23.8 billion during 2003, taking reported net debt to €44.2 billion. Moody's noted it considers various off balance sheet and contingent liabilities to be debt-like and adjusts the reported debt to reflect such - leading to a Moody's adjusted net debt figure of €69.3 billion at year-end 2003 (main adjustments are net present value calculation of operating leases; non consolidated debt which mostly relates to TDIRA bond; contingent liabilities; securitized assets; pension liability and guarantees).

The positive outlook reflects Moody's belief that France Telecom can maintain sustainable higher cash flow in future years. However, investors should note that Moody's expects pressure on France Telecom's free cash flow during 2004 from the resumption of payments to shareholders, higher capex and less positive contributions from positive working capital developments.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.