S&P changes MegaFon view to stable

S&P said it revised the outlook for MegaFon to stable from negative and affirmed its BB+ ratings.

MegaFon recently sold shares valued at RUB 55.7 billion and plans to use most of the proceeds to repay debt. “We now forecast MegaFon’s adjusted debt to EBITDA at about 2.7x and free operating cash flow (FOCF) to debt at about 8% at end-2019, compared with our previous expectation of slightly more than 3x and about 5% respectively,” said S&P in a press release.

“Management remains committed to lower leverage. MegaFon’s management’s commitment to its financial policy should support debt reduction in our view. It targets reported net debt to OIBDA below 2x and no dividend until reported debt leverage declines below 2x. We estimate that MegaFon’s reported leverage at year-end 2019 will be slightly higher than that but is likely to decline below 2x next year. MegaFon paid almost no dividends in 2018-2019 and we don’t expect it will do so in 2020,” the agency said.

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