Arqiva gets positive Fitch rating
June 26, 2023
By Chris Forrester
UK-based TV and radio transmission business Arqiva has just borrowed £250 million. Ratings agency Fitch has allocated a classification of ‘BBB’ with an ‘outlook is stable’ qualification. Fitch expects Arqiva’s debt to steadily fall to zero by 2032.
The new cash will be used primarily to repay its existing European Investment Bank Loan and institutional term loan (ITL) of £262 million.
Fitch says: “Arqiva’s ratings reflect expected gradual deleveraging, in line with its largely contracted revenue profile. We expect net debt-to-EBITDA (leverage) for the whole business securitisation (WBS) notes to peak at 3.4x in the financial year ending June 2024 (FY24) and to fall to zero in FY2032.”
“Long-term RPI-linked contracts and a monopoly in terrestrial television and radio broadcasting underpin Arqiva’s revenue. However, the technology risk and changes in TV and radio content consumption could affect contract renewals. The senior debt is fully amortising by either cash sweep or following a fixed schedule. It benefits from a comprehensive WBS security and covenant package and 12 months of debt service liquidity facility,” adds the ratings agency.
Arqiva’s revenue is underpinned by long-term contracts: Its industry profile is ‘Stronger’ says Fitch.
The agency explains: “Arqiva is the sole UK national provider of network access and managed transmission services (regulated by the UK Office of Communications; Ofcom) for terrestrial television and radio broadcasting. The company owns and operates all television and over 90 percent 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. The recent sale of the telecoms business reduces business diversification and increases reliance upon revenue counterparties in the broadcasting sector,” adds Fitch.
“Arqiva owns two of the three main national DTT commercial multiplexes (of a total of six). In radio broadcasting, Arqiva owns licenses for operating one national commercial digital radio multiplex and more than 40 per cent of the second,” says Fitch.