Press release provided by Standard & Poor's)
NEW YORK, Aug 18 - Following the conclusion of the German
Universal Mobile Telecommunication System (UMTS) auction on
Aug. 17, 2000, Vodafone Group PLC's (Vodafone)
single-'A'-minus/'A-2' corporate credit ratings remain on
CreditWatch with positive implications.
All other ratings on Vodafone and its rated group
companies, AirTouch Communications Inc. and Mannesmann AG,
remain on CreditWatch positive. (See list below for all rating
actions.)
The German UMTS auction ended with six licenses awarded for
total proceeds of about GBP31 billion.
The licenses were awarded to the four existing GSM
operators and two new market entrants, which are expected to
compete aggressively for subscribers primarily on price of
services and/or handset subsidies.
Vodafone's subsidiary, Mannesmann Mobilfunk, acquired in
the German UMTS auction two frequency blocks--of in total 10MHz
paired spectrum--for euro 8.3 billion. The cost per block
conforms broadly with Standard & Poor's expectations--the
German auction proceeds exceeded those of the U.K. auction,
which was expected given the more favorable growth
characteristics of the German mobile market.
It had been expected that Mannesmann would acquire three
blocks of spectrum, however, given that Mannesmann (and
Deutsche Telekom AG) have lower current spectrum reserves than
E-Plus and Viag Interkom, the other German GSM operators.
Mannesmann's total cost of UMTS spectrum is, therefore, lower
than forecast and, despite the expected intensification in
competition and margin compression, this overall is positive
for Vodafone's credit profile.
Vodafone's CreditWatch placement followed the announcement
that Vodafone had agreed to sell Orange PLC (BBB+/Watch Pos/--)
to France Telecom (AA-/Watch Neg/A-1+), and retain the sale
proceeds to strengthen its balance sheet.
This represented a change from Vodafone's earlier plan to
demerge Orange to its shareholders, which would have resulted
in no deleveraging of Vodafone's balance sheet.
The April 2000 downgrade of Vodafone's ratings explicitly
assumed that the group would retain no proceeds from the
demerger.
Standard & Poor's expects to resolve the CreditWatch on
Vodafone and its rated group companies subsequent to the
completion of the Orange disposal, which is expected within the
next couple of weeks. The ratings review will focus, inter
alia, on Vodafone's revenue, controlled free cash flow, and net
debt forecasts, and on the company's future acquisition plans
and internal credit protection targets, Standard & Poor's
said.
RATINGS REMAINING ON CREDITWATCH WITH POSITIVE IMPLICATIONS
Ratings
Vodafone AirTouch PLC
Corporate credit rating A-/A-2
Senior unsecured A-
Commercial paper A-2
AirTouch Communications Inc.
Corporate credit rating A-
Senior unsecured A-
Preferred stock BBB
Mannesmann AG
Corporate credit rating A-/A-2
Mannesmann Finance B.V.
Senior unsecured* A-
*Guaranteed by Mannesmann AG |
