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S&P: Europe cable operators active
Standard & Poor's said 2005 has been another active year for European cable, a sector highlighted in a report titled "Peer Comparison: Three European Cable Operators," with ownership changes in nearly all countries with rated cable operators and further developments in business models.
The report compares the business and financial risk profiles of Kabel Deutschland GmbH (KDG, B+/stable), Telenet Communications NV (B+/stable) and Telewest Communications Networks Ltd. (BB-/Watch negative, soon to be merged with NTL Inc. (B+/Watch developing)).
"Although they have similar ratings, each of the three players operates its own business model and carries a different level of leverage," said S&P credit analyst Simon Redmond.
The agency noted the remaining rated cable entities in the region - Cablecom Holdings AG (B/stable), Cableuropa SAU (B/stable), Kabel Baden-Wuerttemberg GmbH & Co. KG (B/stable), NTL Inc., Tele Columbus AG & Co. KG (B+/Watch negative), UnitedGlobalCom Inc. (B/stable) and Unity Cable GmbH (B/Watch positive) - all have credit profile elements of the three compared issuers to various degrees.
"The differing credit profiles of KDG, Telenet and Telewest reflect national cable industry characteristics and the consequential effects on the individual player's business risk profiles," Redmond added.
Although all three of the peers in the study currently generate positive free operating cash flow, their balance sheet leverage differs considerably, S&P said, noting KDG is very highly leveraged, while Telenet and Telewest have significant gearing, such characteristics are also indicative of each player's ownership and financial policy.
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