economy
'The final bill will be delivered to the citizens': The fact that the state stands behind Telekom is crucial for its credit rating and debt accumulation
While Telekom Srbija receives positive reviews from credit agencies for stabilizing its operations and achieving market dominance, experts warn that the company survives thanks to huge borrowing and the fact that the state is behind it.
TL;DR
- Telekom Srbija's business stabilization and market dominance are receiving positive reviews from credit agencies.
- Experts point to massive borrowing and state backing as crucial for the company's survival.
- The company plans to borrow nearly two billion euros through corporate bonds, mainly to repay old debts and cover refinancing costs.
- Credit agencies Fitch, Moody's, and S&P have assigned ratings, but Telekom has not yet reached investment grade.
- Fitch upgraded Telekom's rating due to market consolidation reducing content costs and the acquisition of parts of United Group's media activities, increasing its market share and user base.
- The state's implicit support significantly boosts Telekom's credit rating beyond its financial indicators.
- High debt levels, with a significant portion denominated in euros while revenues are in dinars, pose a major risk.
- Telekom's total loans amounted to approximately 246 billion dinars at the end of 2024, with financial and interest expenses significantly increasing.
- The company made aggressive purchases of sports broadcasting rights, significantly increasing costs, but later acquired all sports rights for the Western Balkans from United Group.
- Experts criticize Telekom's lack of transparency, negative cash flow, dividend payments from loans, and liquidity issues.
- The company's financial obligations necessitate external financing through bond issuances, as domestic banks are unwilling to increase exposure.
- Concerns exist about the lack of control over the justification of borrowing and the allocation of funds for projects.
- The substantial state ownership is identified as the key factor enabling Telekom's extensive debt accumulation and providing a financial status unattainable by a private company with similar financial metrics.