Global Arab Network | Fitch Affirms Qatar Telecom Ratings on Tunisia Acquisition with Stable Outlook

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Fitch Affirms Qatar Telecom Ratings on Tunisia Acquisition with Stable Outlook

Global Arab Network - - George Haddad

Monday, 22 November 2010 15:28

Tunisia (Tunis) - Fitch Ratings has affirmed Qatar Telecom's (Qtel) Q.S.C's Long-term foreign currency Issuer Default Rating (IDR) 'A+' with Stable Outlook.

This follows its announced offer to acquire Orascom Telecom Holding's (Orascom) 50% stake in Orascom Telecom Tunisie (OTT, 'BBB-'/Stable). Qtel International Finance Limited's global medium-term note programme (GMTN), guaranteed by Qtel, has also been affirmed at 'A+', Global Arab Network reports according to a press statement

Qtel will, together with a local consortium led by Princesse Holding, acquire the 50% stake in OTT for USD1.2bn. The purchase will be executed via Qtel's subsidiary, Wataniya Telecom, which already owns 50% of OTT. The closing of this offer is subject to the approval of the relevant regulatory approvals expected in early January 2011.

Qtel will fund the acquisition through a mix of existing cash and debt. As a result of this transaction, Fitch notes that OTT will be fully consolidated into QTel's results in 2011. Fitch estimates that Qtel's consolidated leverage (net debt to EBITDA) will increase slightly to 2x-2.5x at FYE11, after the closure of this transaction.

The agency is confident that the company will maintain a conservative financial policy and will not test the maximum leverage tolerance set by the Board of Directors at a net debt/EBITDA ratio of 3x-3.5x. The current ratings take into account Qtel's focus on expansion in the Middle East and North Africa (MENA) region, the Indian subcontinent and south east Asia, within the confines of the target leverage metrics, and direct support from the State of Qatar.

Global Arab Network

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