Vodafone risks rating with Kabel buy

Credit ratings agency Moody’s Investors Services is considering downgrading Vodafone stock, following the carrier’s move to acquire German cableco Kabel Deutschland.
Moody’s is reviewing the cellco’s A3 senior unsecured and issuer ratings, and its (P)Baa2 preferred stock shelf ratings on concerns the benefits of the acquisition could be outweighed by an increase in Vodafone’s debt. The agency estimates Vodafone’s adjusted debt/EBITDA will increase 0.6 times, which will take the cellco over the 3.25 times level Moody’s has set for downgrading its A3 rating.
“This is a large transaction for Vodafone, which the company will fund primarily with existing cash resources and debt, resulting in a deterioration in its credit metrics,” explains Iván Palacios, a Moody's vice president, senior credit officer and lead analyst for Vodafone.

Vodafone is set to become Germany’s largest cable company, after wooing the board of Kabel Deutschland with an offer of €87 per share. The acquisition is likely to be completed in 4Q13. 

Suggested Articles

Wireless operators can provide 5G services with spectrum bands both above and below 6 GHz—but that doesn't mean that all countries will let them.

Here are the stories we’re tracking today.

The 5G Mobile Network Architecture research project will implement two 5G use cases in real-world test beds.