Moody's upgrades Telenor outlook to positive, confirms Baa1 rating

Investing.com – Moody’s on Friday confirmed Telenor ASA’s Baa1 senior unsecured rating, while upgrading the outlook from stable to positive, citing the company’s ongoing deleveraging driven by improved operational performance and expected debt repayment from proceeds of asset sales.

The rating agency also confirmed the company’s senior unsecured euro bond issuance rating at (P)Baa1 and Prime-2 short-term commercial paper rating. The company’s baseline credit assessment was affirmed at baa2.

Telenor’s Baa1 rating reflects the uplift from the Norwegian government’s ownership.

Moody’s Vice President and Senior Analyst, Telenor Chief Analyst Luigi Bucci, said: “The recent rating action reflects the company’s continued deleveraging, supported by improved Nordic regional operations and the expected use of cash proceeds from the sale of its Thai business to repay debt.”

Bucci noted that the company’s dividend coverage is expected to remain under pressure through 2026 and possibly into 2027, given Telenor’s expressed intention to participate in Nordic regional consolidation, which involves higher M&A risks.

Telenor announced plans to distribute a total of 39 billion Norwegian kroner from the sale of its stake in True Corporation Public Company Limited. Of this, 15 billion kroner will be used for share buybacks over three years, 11.5 billion kroner for debt repayment, and 6 billion kroner for acquisitions of GlobalConnect Group’s consumer business in Norway. The remaining 6.5 billion kroner will be reserved for M&A activities or, if suitable opportunities are lacking, for additional shareholder distributions.

Moody’s forecasts that, supported by planned debt reduction and sustained EBITDA growth in the Nordic region, the company’s adjusted leverage ratio will decline from 2.9x in 2025 (based on preliminary financial data) to approximately 2.5x–2.6x in 2026-27. The agency estimates that the adjusted RCF/net debt ratio will increase from 18% in 2025 to 20%-21% in 2026-27.

The pending acquisition of GlobalConnect Group’s Norwegian consumer business is expected to have a roughly neutral impact on leverage, as the transaction will be financed with cash.

Telenor’s rating reflects its position as a leading integrated telecom operator in Norway, with strong influence across Scandinavia, and exposure to Nordic market dynamics. These advantages are offset by high shareholder distributions, with free cash flow after dividends expected to break even by 2027, ongoing operational challenges in Bangladesh, and increased M&A risks.

Telenor’s liquidity is supported by €1.8 billion in cash and cash equivalents as of December 2025, and full availability of its €1.8 billion committed revolving credit facility (maturing June 2030). The company’s debt maturities show €11.8 billion due in 2026 and €7.4 billion in 2027. Euro-denominated bonds maturing in 2026 are expected to be repaid in cash.

The positive outlook reflects Moody’s expectation that the adjusted debt/EBITDA leverage will fall below 2.75x in 2026-27, and that the company will maintain good liquidity without deviating from its current financial policy. The assessment excludes any M&A transactions outside the GlobalConnect Group deal.

If operational performance weakens, debt-financed acquisitions increase, or the company shifts to a more aggressive financial policy, the outlook could revert to stable.

If the adjusted RCF/net debt ratio approaches 22% and the adjusted debt/EBITDA remains steadily below 2.75x, the rating could be upgraded. Conversely, if the adjusted RCF/net debt ratio falls below 17% with no prospects for improvement, or if the adjusted debt/EBITDA remains above 3.25x, the rating could be downgraded.

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