Fitch Ratings has affirmed Telekom Austria AG’s (TKA) Long-Term Issuer Default Rating (IDR) with a Positive Outlook and its senior unsecured rating at ‘A-‘. This includes the bond issued by Telekom Finanzmanagement GmbH. Fitch also affirmed TKA’s Short-Term IDR at ‘F1’, reflecting strong financial flexibility and structure.
TKA’s ratings benefit from its leading position in its domestic telecom market, which contributes over 50% of its total EBITDA, and its diverse portfolio of international assets in central and eastern Europe (CEE). The company maintains one of the lowest leverage profiles in European telecom operators, underpinned by a conservative financial policy. However, we expect free cash flow (FCF) to remain constrained in the short to medium term by fibre and 5G infrastructure investments. The Positive Outlook reflects the potential for a rating upgrade of its parent America Movil S.A.B. de C.V. (AMX, A-/Positive), which holds currently 60.8% of TKA.
According to Fitch, TKA holds a leading position in the Austrian market, with mobile and fixed service revenue market shares of about 40% and 55%, respectively. It is one of three major mobile network operators and one of two principal local access network infrastructure providers in Austria. TKA’s operations cover retail, business, wholesale, and pay TV segments, allowing it to offer convergent products and services that drive economies of scale.
Fitch expects TKA to face competitive pressures in its home market, despite its strong market position. In the mobile segment, mobile virtual network operators (MVNOs) are active with attractive offers and aggressive marketing strategies to attract new customers. In the fixed line segment, the roll-out of fibre infrastructure challenges TKA’s dominance, as it will face increased competition from more infrastructure providers, which could affect its wholesale profitability. However, this impact is softened by slow migration to fibre and Austria’s prevalent use of mobile data, where TKA can compete effectively with its mobile broadband offerings.