Standard & Poor's Ratings Services said that it has revised its outlook on the long-term 'BBB+' rating on Spain-based telecommunications operator Telefonica S.A. and related subsidiaries mmO2 PLC, Telefonica Czech Republic AS, Telefonica Moviles Chile S.A., and Telefonica Chile S.A. to negative. At the same time, the 'BBB+' long-term rating was affirmed on all of the companies and the 'A-2' short-term corporate credit rating was affirmed on Telefonica S.A.
"The outlook revision reflects the combination of very tight leeway for our credit metrics at the current rating level, our view of extremely fierce competition and intense price pressures in the Spanish telecom market in the wake of a depressed economy, high unemployment, and their effects on consumer sentiment," S&P said.
The outlook revision on the subsidiaries reflects the rating action on the parent, given the considerable control Telefonica exercises on the subsidiaries' business strategy and financial policy. Telefonica SA owns 70% stake in Telefonica CR.
According to Securities, the news could be slightly negative for the stock price today.
(Standard & Poor's, KBC Securities)