Achieving High Recoveries In European Telecommunications: Asset Quality Counts, But Capital Structure Is Key Dec 06

Standard & Poors, December 2006

Abstract
For any given transaction, the loss on default hinges on a debt instrument's standing in the capital structure, as both priority liabilities and subordinated debt and equity cushions are key factors in determining ultimate recovery. The quality and scope of the security package and applicable insolvency regimes will also affect recoveries for lenders. Furthermore, industry-specific features are key in determining the valuations of the assets available and the resulting potential recoveries. The European telecommunications and cable sector is characterized by capital intensity, technology risk, regulation, and pricing pressure. In addition, although many core businesses are relatively stable, the flip side of technology risk is that some products have strong growth characteristics. The size and timing of both the investment outflows...

Companies mentioned in this report are: TDC A/S,Wind Telecomunicazioni SpA,UPC Holding B.V.,NTC S.A.,Virgin Media Inc.,ERC Ireland Holdings Ltd.

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

TDC A/S,Wind Telecomunicazioni SpA,UPC Holding B.V.,NTC S.A.,Virgin Media Inc.,ERC Ireland Holdings Ltd.

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