S&P reports that TeliaSonera share buyback does not affect its ratings

July 28, 2004

1 Min Read

LONDON -- Standard & Poor's Ratings Services said today that its ratings and outlook on Nordic telecommunications operator TeliaSonera AB (A/Stable/A-1) remain unaffected by the group's announcement of plans to distribute 30%-50% of net income as dividends, and return Swedish krona (Skr) 30 billion ($3.9 billion) to shareholders over the period 2005-2007.

This is a material return to shareholders and TeliaSonera's credit quality carries a degree of event risk given its stated ambitions to participate in the long-awaited consolidation of the European telecoms markets and gain control of its main emerging-market operations. However, in addition to the fact that control of these operations will not be easy due to the significance presence of other shareholders, the above stated risks are mitigated by the group's sound credit protection factors.

These include TeliaSonera's:

  • Modest leverage (with pro forma adjusted net debt to EBITDA of 1x at June 30, 2004);

  • Expected sound free cash flow generation in the medium term; and

  • Stated intention to adjust such returns to shareholders should any major investment opportunity crystallize during the same period.

The group's maintenance of a controlled financial policy, therefore, remains a major ratings driver for the group.

TeliaSonera AB

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