Cell C drops Moody’s amid lower debt
Cell C has ditched ratings agency Moody’s Investors Service after the mobile operator slashed its outstanding debt thanks to a recapitalisation deal.
The company was recapitalised in 2017 by Blue Label Telecoms and Net1.
Cell C will retain its contract with S&P Global Ratings, which monitors its Ireland-listed bonds worth $184m.
The senior secured bonds are due in 2020 and were rated subinvestment grade by both Moody’s and S&P.
"With the decrease in the size of Cell C’s listed bonds, there was limited value in maintaining two ratings agencies," said Tyrone Soondarjee, the operator’s chief financial officer.
Cell C terminated its engagements with Moody’s in October 2017, following its recapitalisation. The move will reduce costs, since ratings agencies charge fees for their services.
Moody’s said on Tuesday it had withdrawn Cell C’s Caa1 corporate rating, Caa1-PD probability of default rating and the Caa1 rating assigned to Cell C’s bonds.
These ratings indicate "very high credit risk", according to Moody’s, whose lowest rating is a C.
In February 2017, S&P cut the rating on Cell C’s bonds — then worth €400m — from C, meaning a default is "imminent with little prospect for recovery", to D because the company had missed interest payments.
In August 2017, S&P increased Cell C’s rating to B-, with a negative outlook, when the company’s ownership structure changed.
Cell C received an equity injection that significantly cut its debt. Blue Label Telecoms and Net1 bought 45% and 15% of the company, respectively.
Cell C grew service revenue 12% to R13.1bn in the financial year to December, but recorded a net loss of R26m after stripping out a R4.1bn debt haircut.
Cell C CEO Jose Dos Santos said in February the company wanted to go public in late 2019 or early 2020.