Arqiva keeps ‘BBB’ Fitch rating
May 22, 2020
By Chris Forrester
Arqiva is going through a restructuring process where it is selling off its telecom business to Cellnex UK which includes 7,400 transmission sites.
The remaining assets include Arqiva’s terrestrial broadcast TV and radio, digital platforms, Smart M2M and satellite & media divisions.
US credit rating agency Fitch says the sell-off will result in a reduction of approximately 25 percent of Arqiva’s group earnings and reduced revenue diversity. “Notably, we view the telecoms division as the least exposed to obsolescence risk out of Arqiva’s various divisions and therefore the proposed transaction would increase the group’s exposure to the greater obsolescence risk associated with linear digital terrestrial TV through the increased emergence of IPTV and on-demand platforms.”
“However, this slight increase in business risk is offset by the resulting debt structure at Arqiva Group. The proceeds of the tower sale will be used to prepay and terminate approximately £1.8 billion (€2bn) of debt and associated swaps respectively. This results in lower leverage,” Fitch adds.
“The disposal is contingent on, among other conditions, secured creditors approval. Arqiva launched a consent solicitation process on 11 May 2020. Bondholder voting is expected to be concluded by end-May,” says Fitch.
Fitch maintains its “BBB/B ‘Outlook Stable” rating on Arqiva’s bonds.