S&P: Magyar, Invitel view developing

Standard & Poor's said it revised its outlook on Magyar Telecom BV and its holding company Invitel Holdings NV to developing from negative and affirmed its B+ long-term corporate credit ratings.

The outlook revision comes after Hungarian Telephone and Cable Corp. agreed with Invitel to acquire the operating company Invitel Távkölési Szolgáltató Zrt. Hungarian Telephone recently entered into a stock purchase agreement with Invitel to indirectly acquire 99.98% of the outstanding shares of Invitel through the acquisition of 100% of the issued ordinary shares of Matel Holdings NV, the parent company of Magyar Telecom BV, for a total consideration of €470 million.

S&P said it acknowledges the credit-enhancing features of the transaction as it combines the two leading alternative telecommunication providers in Hungary with an expected market share of about 20% and the leading position in 14 out of 54 Hungarian historical concession areas. This should enable the combined entity to be in a better competitive position and cope with continuing regulatory and competitive pressures on its core voice business, the agency said.

On the other hand, S&P said this transaction creates many uncertainties about the capital structure and the financial policy of the combined entity in the medium term. New financial covenants could be looser than under Invitel's existing senior secured facilities and there is limited visibility on the capital structure to be eventually implemented at the combined company, the agency said.

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