Telecom's long-term credit rating has been cut one notch by Standard & Poor's to reflect the demerger of the company's Chorus business and the loss of its network revenues.
The rating was lowered to A- from A and the short-term rating to A-2 from A-1, with a stable outlook, S&P said in a statement. The ratings company first flagged the likely cut in August.
"The downgrade reflects TCNZ's reduced revenue diversity and loss of high-credit-quality access network revenues due to the demerger of Chorus," S&P said. "Tempering the loss of these network revenue's is TCNZ's adoption of a more conservative financial policy framework."
Telecom has approval from shareholders and court sign off on the split, which is scheduled to be completed in December. The phone company offered to carve itself up in a bid to shed regulatory burdens and tap tax-payer funding to build the majority of a nationwide broadband network.
Shares of Telecom rose 0.7 per cent to $2.715 and have climbed by about 25 per cent in the past 12 months. The stock is rated 'outperform' based on the consensus of nine recommendations compiled by Reuters.
