Global Telecommunications 2023 Outlook: The Risk Is to the Downside
DBRS Morningstar released a commentary titled “Global Telecommunications 2023 Outlook: The Risk Is to the Downside.” Our negative outlook for global telecommunications (telecom) in 2023 reflects our view that the credit risk profiles of the telecom players in our portfolio may come under some pressure within their respective rating categories. While the utility-like nature of telecom services should support long-term demand for data and telecom services, the high level of capital intensity across the industry will likely influence capital allocation decisions as the weighted-average cost of capital rises. The magnitude and outcome of this impact is uncertain but could hurt the credit risk profiles of individual issuers, depending on how telecom providers prioritize, allocate, and fund capital in the future. While we note that issuers are generally well placed within their respective rating categories, as a consequence of the uncertain capital allocation outlook and the challenges posed by the softening economic outlook, we believe the credit risk is to the downside as 2023 begins.
BCE is a telecommunications and media company providing wireless, wireline, Internet and television (TV) services to residential, business and wholesale customers in Canada. As of Dec 31 2017, Co. operated three segments: Bell Wireless, which provides wireless voice and data communications products and services; Bell Wireline, which provides data, Satellite TV service and connectivity, and includes Co.'s wholesale business, which buys and sells local telephone, long distance, data and other services from or to resellers and other carriers; and Bell Media, which provides conventional, specialty and pay TV, digital media and radio broadcasting services and out of home advertising services.
Cogeco Communications is a communications corporation. Co. provides its residential and business customers with video, Internet and telephony services through its two-way broadband fibre networks. Co. has three operating segments: the Canadian and American cable services segments, which provide a range of video, Internet and telephony services primarily to residential customers; and the Enterprise data services segment provides colocation, network connectivity, managed hosting, cloud services and a portfolio of managed information technology services in Canada, the U.S. and Europe to small, medium and large enterprises around the globe.
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