Eir gets two credit rating upgrades in 24 hours

Moody’s and Fitch continue rating telecoms group’s debt below investment grade

Eir’s offices in Dublin. Photograph: Eric Luke

Eir’s offices in Dublin. Photograph: Eric Luke

 

Two of the world’s leading debt ratings agencies have upgraded their view of Eir’s creditworthiness this week as the telecommunications group continues a turnaround that began in 2015.

Moody’s upgraded its rating on Eir, formerly Eircom, on Thursday morning to B1 from B2, although the new stance remains four levels what the agency considers to be “investment grade”. The previous evening, Fitch Ratings raised its long-term rating on the former telecoms monopoly by one notch to an equivalent rating, B+.

“The upgrade of Eir’s ratings to B1 primarily reflects our expectation that the company’s operating performance will continue to improve over the next 12-18 months, driven by cost savings and moderate underlying revenue growth,” said Laura Perez, a Moody’s analyst, adding that this should help Eir cut its debt burden to “sustainably below” five times operating earnings.

Sales growth

Eir, which incurred €4.1 billion of debt through five changes in control in 13 years before filing for the country’s biggest examinership case in 2012, returned to annual sales growth for the first time since 2008 in the year to last June. It said last month that its sales for the six months to the end of December had risen by a further 2 per cent to €660 million.

Some 40 per cent of the group’s debt mountain was written off during the 2012 restructuring.

Moody’s said the recent performance improvement in Eir follows significant investment in fibre and fourth-generation (4G) mobile networks, coupled with recent investments in exclusive content through the acquisition of Setanta Sports Channel Ireland, rebranded to Eir sport.