The agency, which releases ratings on companies and industries relating to investment potential, states the sector continues to exhibit flat to declining revenue growth, with EBITDA margins under pressure and gradually increasing leverage.
Fitch’s report discussed key rated companies across the western European telecoms and cables sectors. It highlighted the larger companies which have presence in multiple countries, with experienced management teams, that are better able to react to market dynamics.
Lower rated companies tended to be less diverse and subject to cash volatility due to regulation, competition and shifts in technology. Burgeoning debt was also highlighted as a major problem for the smaller companies.
Regulation is assessed as a key theme within the report. Fitch highlighted that operators with multiple platforms in different geographies tended to have higher market share. Differing regulation in diverse geographies was, however, the major factor in the extent of these benefits.
Cable operators investing in new technology will remain in a stronger position, compared to incumbents still operating copper, added Fitch.
For more on the European wholesale telecoms market, read our dedicated Special Report.
