Moody's changes Ericsson view to stable

Moody's Investors Service said it changed to stable from positive the outlook on Telefonaktiebolaget LM Ericsson. Concurrently, the agency affirmed the company's Ba1 corporate family rating, its Ba1-PD probability of default rating and the Ba1 senior unsecured long-term debt ratings.

On Monday, Ericsson reported it agreed to acquire Vonage Holdings Corp. for about $6.2 billion in enterprise value. Ericsson plans to fund the deal with cash and cash-equivalent investments.

"We have changed the outlook on Ericsson's ratings to stable from positive given that following the cash-funded acquisition of Vonage, it will take the company longer than previously expected to reach a net cash positive position. The transaction is fully priced, and there is execution risk associated with Ericsson's ability to scale up the acquired business and the ability to generate revenue synergies," said Ernesto Bisagno, a Moody's vice president, senior credit officer and lead analyst for Ericsson, in a press release.

"However, we also recognize that Vonage's acquisition will give Ericsson access to a global communication platform in a high growth market and will enhance its enterprise business," Bisagno added.

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