Moody's rates TIM Hellas notes B1, B3

Moody's Investors Service said it assigned a provisional B1 corporate family rating to Hellas Telecommunications II Sarl, an indirect holding company of TIM Hellas Telecommunications SA.

Moody's also assigned a prospective B1 rating to the proposed issuance of senior secured notes in the amount of €925 million due 2012 to be issued by Hellas Telecommunications (Luxembourg) V and a prospective B3 rating to the proposed issuance of senior unsecured notes in the amount of €355 million due 2013 to be issued by Hellas Telecommunications (Luxembourg) III. The outlook is negative.

Moody's said the prospective B1 corporate family rating reflects (i) the company's highly leveraged capital structure; (ii) TIM Hellas' market position as a third mobile operator in the Greek market, with two strong competitors; (iii) the company's downward trend in its recent operating performance and the challenges it faces in retaining its market share and containing high churn rates; (iv) regulatory pressure resulting in a further reduction in interconnect rates; (v) the relatively new management team, albeit with a strong expertise in the Greek telecommunications market; and (vi) uncertainties associated with the potential acquisition of Q-Telecom.

More positively, the corporate family rating reflects (i) the incremental growth opportunities available to the company; (ii) its historically stable ARPU; (iii) the moderate capital expenditure requirements; (iv) solid cash flow generation; and (v) the potential operational benefits from the ongoing association with TIM Italia SpA, the agency said.

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