Overview
-- We lowered the long-term foreign currency sovereign credit rating on
the Republic of South Africa to 'BBB' from 'BBB+' and the long-term local
currency rating to 'A-' from 'A' on Oct. 12, 2012.
-- We subsequently revised our mapping guidelines for our South Africa
national credit rating scale.
-- We are raising our long-term national scale rating on South African
mobile operator Vodacom Group Ltd. to 'zaAA+' from 'zaAA-' and affirming our
short-term rating at 'zaA-1'.
Rating Action
On Oct. 16, 2012, Standard Poor's Ratings Services raised its long-term
South Africa national scale rating on Vodacom Group Ltd. to 'zaAA+'
from 'zaAA-' and affirmed its short-term rating at 'zaA-1'.
Rationale
The rating action follows Standard Poor's Ratings Services' revision on Oct.
15, 2012, of guidelines for its South Africa national credit rating scale (see
"Standard Poor's Revises Mapping Guidance For South Africa National Credit
Rating Scale Following Sovereign Downgrade," published Oct. 15, 2012). The
revised mapping follows the downgrade of our sovereign credit ratings on the
Republic of South Africa on Oct. 12, 2012. The changes in the mapping table do
not reflect any change in the fundamental credit quality of any individual
issuer within the country except for the sovereign. South Africa national
scale credit ratings express relative opinions about the creditworthiness of
an issuer or credit quality of an individual debt issue, from strongest to
weakest, within a universe of credit risk within the country. The changes aim
at providing more room for differentiating credit quality within the country.
With the revised mapping, the government of the Republic of South Africa
remains the most creditworthy borrower within the South African context.
We continue to view South Africa-based mobile telecommunications services
provider Vodacom Group Ltd.'s business risk profile as "satisfactory" and its
financial risk profile as "intermediate."
The ratings on Vodacom are supported by the group's resilient and leading
position in the maturing South African mobile telephony market. Rating
strengths also include the group's sustained solid free cash flow generation
and moderately leveraged balance sheet.
However, our expectations of increasing competition and adverse regulatory
changes over the next few years in South Africa constrain the ratings.
Additional credit quality constraints include sizable infrastructure
investment requirements and growing exposure to higher-than-average political,
operational, and currency risks in the countries in which Vodacom operates
outside South Africa.
Related Criteria And Research
-- Standard Poor's Revises Mapping Guidance For South Africa National
Credit Rating Scale Following Sovereign Downgrade, Oct. 15, 2012
-- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18,
2012
-- Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Sept. 28, 2011
-- Principles Of Credit Ratings, Feb. 16, 2011
-- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Ratings List
Upgraded; Ratings Affirmed
To From
Vodacom Group Ltd.
Corporate Credit Rating
South African National Scale zaAA+/--/zaA-1 zaAA-/--/zaA-1
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.
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