LONDON-KPN NV, the Netherlands’ largest telecommunications company, received a significant boost from Moody’s Investors Service, which raised ratings on the carrier’s $16.2 billion in outstanding debt and said it would review the company for further upgrades.
Moody’s bumped into the investment-grade strata the telecom operator’s $1.62 billing in subordinated convertible notes, raising their rating to Baa3 from Ba1.
It also raised by one notch the investment-grade ratings on the rest of KPN’s long-term debt, both senior unsecured and subordinated issues, to Baa2 from Baa3.
The rating agency said KPN reduced its “total adjusted debt” to $23.66 billion from $29.92 billion last year. During the same period, the Dutch carrier also increased its operating cash flow to $4.2 billion from $2.81 billion.
KPN offers fixed-line telephony, data and Internet Protocol services in Western Europe and mobile communications services in the Netherlands, Germany and Belgium.
“Operationally, there has been a significant improvement within all three of KPN’s mobile businesses. Moody’s expects that KPN will continue to lead its domestic mobile market and feels it is unlikely to suffer from potential consolidation in the Dutch mobile market,” said Stuart Lawton and Ann-Christine Hagelin, London-based telecommunications analysts for the rating agency.
“KPN also benefited in 2002 from a $1.19 billion reduction in working capital needs, which Moody’s does not expect to be repeated, and from a fall in cap-ex by $1.94 billion.”
