Fitch confirms Arqiva’s debts as “stable”
August 2, 2022
By Chris Forrester
Fitch Ratings has affirmed UK transmission company Arqiva and its Arqiva Financing and Arqiva PP Financing plc’s whole business securitisation bonds at ‘BBB’. It has also affirmed Arqiva Broadcast Finance plc’s high-yield (HY) bonds at ‘B-‘. The Outlooks are Stable, says Fitch.
Arqiva enjoys long-term RPI-linked contracts and a monopoly in terrestrial television and radio broadcasting which underpin Arqiva’s revenue. Arqiva owns two of the three main national DTT commercial multiplexes (out of a total of six). In radio broadcasting, Arqiva owns licences for operating one national commercial digital radio multiplex and more than 40 per cent of the second.
However, Fitch cautions that the technology risk and changes in TV and radio content consumptions could affect contract renewals. The senior debt is fully amortising by either cash sweep or following a fixed schedule. It benefits from a comprehensive ‘whole business securitisation’ security and covenant package and 12 months of debt service liquidity facility.
Arqiva owns and operates all television [transmission] and over 90 per cent of the radio transmission towers used for digital terrestrial television (DTT) and terrestrial radio broadcasting in the UK. Arqiva has long-term contracts with public service broadcasters to provide coverage to 98.5 per cent of the UK population, as well as with commercial broadcasters.
Fitch adds that the recent sale of the telecoms business reduces business diversification and increases reliance upon revenue counterparties in the broadcasting sector.