LONDON -- Standard & Poor's Ratings Services said today it assigned its 'B+' long-term corporate credit rating to Belgium cable operator Telenet Communications N.V. The outlook is stable.

At the same time, Standard & Poor's assigned its 'B-' long-term rating to Telenet's proposed €400 million ($486 million) senior unsecured notes issue maturing 2013.

The ratings on Telenet reflect its position as a modestly sized and highly leveraged cable operator in Flanders, Belgium. Telenet operates an analogue cable television (CATV) business, which generates stable and positive cash flows. It also operates smaller, but growing telephony and Internet operations that face strong competition from the incumbent Belgacom S.A. (AA/Watch Neg/A-1+), among others.

Telenet's credit ratios are aggressive with lease-adjusted gross debt (including convertible subordinated notes) to annualized third-quarter 2003 EBITDA of 6.1x on gross debt of €1.5 billion. "The group's financial profile is further constrained by the covenants on its secured bank credit facility, even after their renegotiation concurrently with the issuance of the notes," said Standard & Poor's credit analyst Leandro de Torres Zabala. "Telenet's challenge will be to expand sales of fixed-line telephony and broadband Internet quickly enough to service adequately its high debt levels and remain compliant with covenants that give access to the credit facility against strong competition from Belgacom and fixed-to-mobile substitution."

Telenet is also putting in place a refinancing plan, of which the proposed €400 million notes issue and the concurrent renegotiation of the credit facility are part of, to reduce debt under its senior credit facility by €455 million and repay deferred purchase obligations and subordinated shareholder loans for €230 million.

Telenet's liquidity after the refinancing plan will be adequate and the company generated positive free cash flow--€35 million for the first nine months of 2003.

Telenet is expected to grow rapidly its sales and cash flows to pay down debt, secure adequate liquidity at all times, and maintain ample headroom under covenants. The group is expected to run a conservative financial policy with no major acquisitions (other than those currently in progress) and no major network upgrades.

Standard & Poor’s