Johannesburg, Feb 14 (I-Net Bridge) - International ratings agency Moody's has upgraded MTN Group's (MTN) global scale issuer rating from Baa3 to Baa2 and its South African national scale issuer rating from A2.za to A1.za. The outlook is positive.
"The upgrade to Baa2 is among other factors a reflection of MTN's track-record of strong credit metrics, its conservative financial policies underpinned by prudent leverage and solid liquidity as a result of the group's strong commitment to its investment-grade rating, as well as its track-record of managing diverse exposures in various riskier emerging markets from which it has been able to successfully upstream cash flows via dividends and management fees from its largest operations from a cash flow perspective," explained Soummo Mukherjee, Moody's Vice President Senior Analyst.
The positive outlook reflects Moody's expectation that MTN's credit profile will further strengthen over the near-to-medium term on the back of evidence of continued sustained subscriber and top-line growth trends in most of its markets outside of South Africa.
"We also view positively MTN South Africa's operations' lower leverage than on a consolidated MTN group basis, which mitigates to some extent the reliance on cash upstreamed from its international operations," added Mukherjee.
The rating is tempered by some uncertainties in terms of MTN's ability to defend its leading market position and high EBITDA margins in Nigeria, as well as, the impact of possible regulatory changes and/or overall political and economic developments in Iran, Syria and Nigeria. Nigeria is MTN's main market, representing approximately 30% of revenues and 40% of its total EBITDA with MTN's highest EBITDA margin of greater than 60% on a reported basis.
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