S&P Maalot: Bezeq's financial profile is harmed by limited financial flexibility caused by the aggressive dividends policy.
Standard & Poor's Maalot Ltd. has downgraded the bonds of Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) and its mobile subsidiary Pelephone Communications Ltd. to AA with a "Stable" outlook. Citing the very close connection between Bezeq and Pelephone, Maalot said that the ratings of the two companies were the same.
Maalot said, "Due to the dynamic telecommunications' market exposure to increased competition and regulation in the recent period, we believe that Bezeq's business profile has weakened. The company's financial profile continues to be adversely affected from limited financial flexibility caused by the aggressive dividends policy and from what we believe is a modest increase in leverage in the short term." Maalot doubts that Bezeq's policy of distributing all its profits will not change any time soon.
Maalot cites, "The companies' sensitivity to changes in the character of the telecommunications market, which are liable to adversely affect their financial profile in the long term," as the reason for the downgrade. However, it adds, "The 'Stable' outlook reflects our assessment that there will be no further weakening of the companies' financial profile and business standing, and that Bezeq will continue to maintain stable high cash flows and profit margins."
Published by Globes [online], Israel business news - www.globes-online.com - on February 24, 2013
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