29 Oct 10 -
The outlook for Europe’s cable sector is bright after a period of solid operating performance through the recession and steady efforts to reduce debt loads. Moody’s has lifted its rating on the sector to positive based on these and other factors. In contrast, its analysts have lowered ratings for the US cable sector.
The credit ratings agency notes that the Europe’s MSOs have benefitted from the switch to digital TV and from demand for the triple play of TV, phone and Internet services. Supplementary offerings including video-on-demand and mobile are also contributing to revenue growth, Moody’s said.
“European cable operators are relatively well positioned as most European economies emerge from the recession,” Moody’s noted. “The majority of operators have exhibited resilient operating performances and have increased their EBIDTA margins. Meanwhile, an increasing level of free cash flow is allowing some of them to de-lever.” It added: “The picture is different in the US, where we recently revised our outlook to stable from positive.”
Moody’s tips Liberty Media as a company that will continue to pursue M&A activity in Europe. “With more than US$3.5 billion of cash on hand as of 30 June 2010, as it remains a likely acquirer, in Moody’s view,” it said.
Virgin Media and Ono are the only individual cablers that Moody’s has a positive rating on in Europe. Kabel Deutschland, Unitymedia, Telenet, UPC, Ziggo and RCS & RDS are all rated stable. Liberty Global is rated negative.
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