Telkom has received a revised credit rating outlook from S&P Global.
“Due to the recent rating action taken by S&P Global Ratings on South Africa’s long-term foreign currency rating from BBB- to BB+… noteholders are hereby advised of the company’s rating which has been affirmed at BBB-,” said Telkom.
“Furthermore, [S&P Global] has changed its rating outlook to negative from stable on the company.”
S&P Global advised that “the rating review reflects its view of potentially weakening economic conditions as well as political and institutional uncertainty in the country in the next year”.
This could have an impact on Telkom’s creditworthiness.
Telkom’s global scale rating is now one notch above the country’s credit rating of BB+, negative.
The negative outlook means there is a possibility of a downgrade over the next year if the sovereign rating falls further, said Telkom.
Update: Statement from Telkom
Telkom today welcomed the decision by S&P Global to affirm the Company’s credit rating at BBB-.
Commenting on the decision, Telkom’s Group CEO Sipho Maseko said the decision was a nod to the aggressive implementation of a turnaround strategy by the Company.
“We embarked on our turnaround strategy almost four years ago and in these trying times it is imperative that we maintain our focus. We will continue to actively manage our costs, our cash and our use of capital, in the most efficient manner possible,” he said.
Telkom remains undeterred in its objectives despite the revision of its outlook to negative. The Group will be reviewing all its forward resource allocation to ensure effective prioritisation, along with the pursuit of a sustainable business.
“While we welcome the maintenance of our current rating we’re also cognisant that we don’t exist as an island. At this time, it is imperative that our national focus is shifted to shaping an effective way forward,” Maseko said.
“The downgrade of the sovereign will potentially affect the economy at large and the country needs to pull together more than ever before. In the immediate term the focus should be to avoid a recession. Collaboration between government, business, labour and civil society will be vital to evolve a new growth framework to take the country forward,” he added.