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UPDATE 1-S&P may cut KPN credit rating
November 21, 2012 / 12:50 PM / 5 years ago

UPDATE 1-S&P may cut KPN credit rating

BRUSSELS, Nov 21 (Reuters) - Credit ratings agency Standard & Poor’s said it might cut KPN’s debt rating if the Dutch telecoms group’s debt situation did not improve in 2013.

KPN, hit by Europe’s lacklustre economy, breached its debt targets in the second quarter and has already cut its 2012 dividend. Its net debt to core profit ratio, which it wants to keep in a 2.0-2.5 range, was 2.7 at the end of September.

“The negative outlook reflects the risk of a one-notch downgrade within the next 18 months if KPN’s adjusted credit metrics deteriorate significantly more than we expect in 2012, or fail to be restored within more commensurate levels for the rating by year-end 2013,” S&P said on Wednesday.

S&P confirmed its BBB credit rating, which is still an investment grade level, meaning that a large number of investment funds can buy the group’s debt.

Ratings agency Moody’s already has a negative outlook on KPN’s Baa2 debt rating, also an investment grade rating.

On Nov. 14, chief executive Eelco Blok said he may accept a lower credit rating if that meant KPN could continue to invest in its networks in the Netherlands, Belgium and Germany.

KPN shares were up 7.6 percent at 1250 GMT, buoyed by an Austrian newspaper report that the European Union will clear a merger in the telecoms sector, giving traders hope about KPN’s consolidation efforts in Germany. (Reporting By Robert-Jan Bartunek; Editing by Dan Lalor)

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