Ratings upgrade for France Télécom

15 May 2003

The beleaguered telecoms sector received a welcome boost on its long road to recovery yesterday with the news that credit rating agency Standard & Poor’s (S&P) has raised France Télécom’s [Paris: FTE.PA] long-term rating by one notch to BBB and its short-term rating from A-3 to A-2. The long-term rating of Orange, the French operator’s mobile subsidiary, was also raised from BBB minus to BBB. S&P said the ratings upgrades were granted as a result of a ‘step change’ in France Télécom’s capital structure and cash flow after its successful EUR15 billion rights issue in March 2003. The operator’s debt burden is now thought to be around EUR50 billion, having peaked at EUR70 billion following the telecoms boom at the turn of the decade. The upgrade is the first since the company was partially privatised in 1997. Early last month S&P said that France Télécom’s rating could return to the mid-investment grade single A category in the medium-term if it continues to make progress with its debt reduction strategies.

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