Fitch affirmative on WIND Hellas funding change

LONDON – Fitch Ratings yesterday affirmed Greek mobile operator WIND Hellas Telecommunications’ (WIND Hellas) long- and short-term issuer default ratings (IDRs) at B. The outlook for the long-term IDR remains stable. The company stated in its earnings call on February 19 that the funding requirements of its 50 percent-owned fixed-line subsidiary, Tellas, would be met from WIND Hellas cash flow and resources, without contribution from the minority shareholder, Wind Telecomunicazioni SpA (rated BB- [BB minus] / Negative Outlook). This strategy represents a change to information previously provided to the agency by the company, in that the funding requirement was originally expected to be shared. However, Fitch affirmed WIND Hellas’s ratings, reflecting the better-than-expected improvement in mobile revenues and EBITDA generation in the fourth quarter to -466 million at the end of 2007, and an increase in the cash balance to -110 million. Fitch’s projected credit metrics for 2008 therefore remain relatively unchanged. In addition, the company indicated that the parent entity, Weather Investments SpA, would be willing to fund additional requirements at Tellas if liquidity at WIND Hellas was lacking. The B LT IDR reflects the agency’s confidence in the proven cash-flow-generating abilities of the core mobile business, as well as the growth potential of the fixed-line business, which is expected to contribute positively in the medium term. However, any underperformance in EBITDA or cash flow in the fixed-line business of Tellas, which Fitch views as involving a higher level of execution risk, will likely result in a negative outlook or downgrade of the ratings, especially if combined with an exercise of the call option on the minority shares in Tellas, which extends to 2010.