Continuous robust results and strong outlook in the wireless segment, paired with an advance in financial leverage, prompted Moody's Investors Service to upgrade Deutsche Telekom AG's subsidiary in the United States. The update released on Friday revealed the so-called corporate family rating of T-Mobile US Inc. was increased to Ba2 with a stable outlook, from Ba3.
The probability of default was moved equivalently, to Ba2-PD from Ba3-PD. The credit appraiser noted the failure to go through with a merger with Sprint Corp. Such a transaction would strain the metrics, the firm's analysts concluded and forecasted earnings before interest, tax, depreciation and amortization will maintain growth. However, the telecommunications operator is under the target leverage band of three to four times net debt to core EBITDA, the statement adds.
The adjusted measure advanced to 3.4 times in the past quarter, against 4.5 times from the fiscal year ending in 2015, according to the highlights in the update, which also stresses expectations of healthy free cash flow "over the next few years." The senior unsecured grade was equally improved, while the senior secured rating was raised to Baa2 from Baa3. The speculative grade of liquidity of SGL-1 was maintained.
