Matterhorn Telecom Holding SA — Moody’s affirms Salt’s B2 CFR; secure outlook

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Ranking Motion: Moody’s affirms Salt’s B2 CFR; secure outlookGlobal Credit score Analysis – 14 Feb 2022London, 14 February 2022 — Moody’s Traders Service (“Moody’s”) has in the present day affirmed Matterhorn Telecom Holding SA’s (Salt or the corporate) B2 company household ranking (CFR) and B2-PD chance of default ranking (PDR). Concurrently, Moody’s has affirmed the B2 instrument scores on the EUR500 million senior secured time period mortgage B due 2026 (EUR400 million excellent following prepayment), on the CHF60 million senior secured revolving credit score facility due 2024, on the EUR675 million assured senior secured notes due 2026 (together with EUR100 million add-on issued in 2020), and on the EUR250 million assured senior secured notes due 2024 all issued by Matterhorn Telecom SA, a direct subsidiary of Salt. The outlook on each entities stay secure.RATINGS RATIONALE”The affirmation of Salt’s scores displays (1) the corporate’s constructive momentum in cellular companies mirrored by way of a observe file of postpaid cellular web provides for business-to-consumer (B2C) and business-to-business (B2B) subscribers, (2) the nice progress prospects for Salt’s mounted broadband providing from a nonetheless comparatively low degree, (3) the robust underlying money circulation era earlier than shareholder remuneration, and (4) the corporate’s enough liquidity place supported by its money stability and full availability beneath the revolving credit score facility”, says Sebastien Cieniewski, Moody’s lead analyst for Salt.Nonetheless, these strengths are mitigated by (1) Salt’s excessive Moody’s adjusted gross leverage at 5.9x as of the final twelve months (LTM) interval to 30 September 2021 (as adjusted by Moody’s primarily for indefeasible rights of use (IRUs) liabilities) with restricted de-leveraging prospects over the following two years, (2) the excessive degree of shareholder remuneration with Moody’s assumption that each one extra money circulation generated will likely be distributed to NJJ Capital (NJJ), and (3) the mature nature of the Swiss telecom market with an rising degree of competitors, together with from second and third manufacturers.Salt skilled robust income and adjusted EBITDA progress (as reported by the corporate submit IFRS15 and IFRS16) of 4.8% and 5.2%, respectively, within the first 9 months of 2021 in comparison with the identical interval final yr. Income progress was supported by B2C and B2B postpaid cellular web provides of 52,500 in Q1-Q3 2021 (Q3 2021 was the tenth consecutive quarters of postpaid cellular web provides), a restoration of roaming revenues pushed by the easing of visitors restrictions and lockdown measures, and a powerful momentum in in Salt’s ultra-fast broadband enterprise which surpassed the 150,000 subscriber mark in Q3 2021. Moody’s tasks modest income progress at round 2% in 2022 and 2023 supported primarily by the robust progress potential of Salt’s fibre product with a modest constructive contribution from cellular companies as progress in postpaid cellular subscribers will likely be principally offset by a discount in pay as you go cellular prospects and decrease voice cellular termination charges.After having peaked at 6.2x in 2020 on account of a modest lower in EBITDA within the midst of the coronavirus pandemic and a better Moody’s adjusted gross debt pushed by greater IRUs reflecting progress of the ultra-fast broadband providing, Salt’s leverage improved to five.9x on the finish of September 2021 supported by the robust EBITDA progress throughout the interval. Moody’s notes that Salt’s leverage displays the lengthy 20-year grasp lease settlement (MLA) for using cellular towers the corporate bought to Cellnex S.A. in 2019 in addition to the lengthy IRU commitments for entry to Swisscom AG’s (A2 secure) and utility corporations’ fibre infrastructure. The ranking company doesn’t count on any significant de-leveraging over the following two years because the projected reasonable progress in EBITDA will likely be mitigated by rising IRUs liabilities. Salt has a monetary coverage of sustaining web leverage (as reported by the corporate excluding lease and IRU liabilities) at between 3.5x and 4.0x — the corporate was on the decrease finish of this vary as of the tip of Q3 2021.LIQUIDITYMoody’s considers that Salt advantages from an enough liquidity place supported by a money stability of CHF346 million and full availability beneath the CHF60 million revolving credit score facility as of 30 September 2021. The ranking company assumes that capex wants will enhance over time reflecting the funding in its fibre providing and that each one extra money circulation will likely be used for shareholder remuneration. Within the first 9 months of 2021, Salt paid CHF185 million to its shareholders within the type of share premium reimbursement and the corporate introduced that it’ll distribute CHF90 million of dividends in This fall 2021. The big funds in 2021 are supported by the underlying money circulation era in addition to the proceeds from the sale in March 2021 of the remaining funding of 10% in Swiss Infra Providers S.A. to Cellnex S.A. for a consideration of CHF146 million.STRUCTURAL CONSIDERATIONSSalt’s B2-PD PDR displays our assumption of a 50% household restoration fee usually utilized in constructions together with a mixture of financial institution debt and bonds. The senior secured time period mortgage and revolving credit score facility and senior secured notes rank pari passu and share the identical assure and safety bundle, the latter comprising share pledges, financial institution accounts and intercompany receivables. The B2 instrument ranking on these amenities, on the similar degree because the CFR, thus displays the absence of any liabilities rating forward or behind.RATIONALE FOR STABLE OUTLOOKThe secure outlook displays Moody’s expectation that the corporate will proceed to expertise constructive underlying working efficiency as postpaid cellular web provides and progress in ultra-fast broadband will assist a reasonable income and EBITDA progress.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward stress on the B2 CFR may develop if (1) the corporate’s working efficiency considerably improves, together with by way of sustained income progress supported by subscriber web provides and bettering ARPU, such that its adjusted debt/EBITDA decreases to under 5.0x on a sustained foundation, (2) the corporate adopts a extra conservative monetary technique leading to a major constructive free money circulation (FCF) era in any case shareholder remunerations, and (3) the corporate maintains a very good liquidity place.Downward stress might be exerted on the ranking if the corporate’s working efficiency deteriorates, with a sustained decline resulting in stress on margins, or it will increase shareholder distributions such that its adjusted debt/EBITDA is maintained at above 6.0x or the corporate’s liquidity place weakens.PRINCIPAL METHODOLOGYThe principal methodology utilized in these scores was Telecommunications Service Suppliers printed in January 2017 and accessible at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1055812. Alternatively, please see the Ranking Methodologies web page on www.moodys.com for a replica of this system.COMPANY PROFILESalt is the third-largest cellular community operator in Switzerland, with a subscriber market share of round 15% as of 2020 and about 1.8 million cellular prospects as of September 2021. Within the final twelve months (LTM) interval to 30 September 2021, the corporate reported whole income and company-adjusted EBITDA of CHF1,028 million and CHF520 million, respectively (together with IFRS15 and IFRS16).REGULATORY DISCLOSURESFor additional specification of Moody’s key ranking assumptions and sensitivity evaluation, see the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure type. Moody’s Ranking Symbols and Definitions could be discovered at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For scores issued on a program, sequence, class/class of debt or safety this announcement offers sure regulatory disclosures in relation to every ranking of a subsequently issued bond or be aware of the identical sequence, class/class of debt, safety or pursuant to a program for which the scores are derived solely from present scores in accordance with Moody’s ranking practices. For scores issued on a assist supplier, this announcement offers sure regulatory disclosures in relation to the credit standing motion on the assist supplier and in relation to every specific credit standing motion for securities that derive their credit score scores from the assist supplier’s credit standing. 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Exceptions to this strategy exist for the next disclosures, if relevant to jurisdiction: Ancillary Providers, Disclosure to rated entity, Disclosure from rated entity.The scores have been disclosed to the rated entity or its designated agent(s) and issued with no modification ensuing from that disclosure.These scores are solicited. Please confer with Moody’s Coverage for Designating and Assigning Unsolicited Credit score Rankings accessible on its web site www.moodys.com.Regulatory disclosures contained on this press launch apply to the credit standing and, if relevant, the associated ranking outlook or ranking assessment.Moody’s normal rules for assessing environmental, social and governance (ESG) dangers in our credit score evaluation could be discovered at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The International Scale Credit score Ranking on this Credit score Ranking Announcement was issued by considered one of Moody’s associates exterior the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Important 60322, Germany, in accordance with Artwork.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit score Ranking Businesses. Additional data on the EU endorsement standing and on the Moody’s workplace that issued the credit standing is offered on www.moodys.com.Please see www.moodys.com for any updates on adjustments to the lead ranking analyst and to the Moody’s authorized entity that has issued the ranking.Please see the scores tab on the issuer/entity web page on www.moodys.com for extra regulatory disclosures for every credit standing. Sebastien Cieniewski VP – Senior Credit score Officer Company Finance Group Moody’s Traders Service Ltd. One Canada Sq. Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Shopper Service: 44 20 7772 5454 Mario Santangelo Affiliate Managing Director Company Finance Group JOURNALISTS: 44 20 7772 5456 Shopper Service: 44 20 7772 5454 Releasing Workplace: Moody’s Traders Service Ltd. One Canada Sq. 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