Moody's Upgrades Telenor Outlook to Positive on Deleveraging

Key Rating Affirmation and Outlook Change

Moody's Ratings has affirmed Telenor ASA’s Baa1 senior unsecured rating while revising the company's outlook from stable to positive. This change is driven by expectations of continued deleveraging, supported by improved operational performance and strategic debt repayment from disposal proceeds.

Financial Strategy Overview

The positive outlook stems from Telenor's effective use of proceeds from the sale of its stake in Thailand's True Corporation. From the NOK 39 billion in proceeds, the company plans to allocate NOK 11.5 billion for debt repayment. Moody's forecasts Telenor's adjusted leverage will decrease to approximately 2.5x-2.6x by 2026-27, down from 2.9x in 2025.

Market Position and Risks

Telenor's Baa1 rating reflects its strong market position as an incumbent telecom operator in the Nordic region. However, the rating is balanced by high shareholder distributions and notable M&A risks, as the company has expressed interest in further regional consolidation. The pending acquisition of GlobalConnect Group’s Norwegian consumer unit is expected to be leverage-neutral.

Summary and Future Projections

Moody's anticipates Telenor's adjusted debt/EBITDA will fall below 2.75x over the next two to three years. A rating upgrade could occur if the company's adjusted RCF/net debt ratio sustainably moves towards 22%. Conversely, the outlook could revert to stable if leverage remains higher than expected due to operational weakness or aggressive financial policy.

FAQ

Q: Why did Moody's change Telenor's outlook to positive?
A: The change reflects the company's ongoing deleveraging, improved operating performance, and planned debt repayment using proceeds from its Thailand unit sale.

Q: What is Telenor's current credit rating from Moody's?
A: Telenor's senior unsecured rating is affirmed at Baa1, with a positive outlook.

Source: Investing.com