BT shrugs off S&P pension revision

UK – Phone firm BT Group says S&P’s revision of its credit outlook – partly due to its pension leverage – is “not major news”.

Standard & Poor's Ratings Services revised its outlook on the firm, the UK’s former phone monopoly, to “stable from positive, as a result of a slower-than-expected improvement in the group's financial profile”.

"The outlook revision primarily reflects the slower-than-expected improvement in BT's financial profile, including its pre-pension leverage measures, in addition to the meaningful challenges presented by the group's rapidly evolving operating and regulatory environment," said S&P analyst Simon Redmond.

S&P affirmed all its ratings on the group, including its 'A-/A-2' corporate credit ratings.

“It’s not major news as far as we’re concerned,” said a BT spokesman of the report – adding the firm’s pensions were “pretty healthy”. “I don’t think there’s any problems there.”

S&P added that BT’s ratings continue to be supported by its “strong market position and relatively stable earnings of its core UK fixed-line business, ongoing focus on operating and capital efficiency, continuing cash generation, and commitment to a conservative financial policy”.

It pointed out that BT’s has gross debt of 13.5 billion pounds (19.8 billion euros) – and a group total pension deficit under the FRS17 accounting standard of 3.6 billion pounds after tax.

The BT spokesman added the revision would not affect its interest payments.

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