Deutsche Telekom's ratings are likely to survive the company's decision to delay the initial public offering of T-Mobil - as long as the company keeps the rest of its strategic promises.
Moody's Investors Service, the ratings agency, recently downgraded Deutsche Telekom to A3 and put the company on negative outlook. Standard & Poor's rates the company A minus. If the rating agency viewed the T-Mobil development to be very negative, Deutsche Telekom would have been put on review for another downgrade. This would increase the company's debt servicing costs on existing debt and bump up the cost of future funding. Carlos Winzer, the lead telecoms analyst at Moody's, said: "The rating is dependent on a variety of factors, not just the T-Mobil sale. Deutsche Telekom is already close to its ratings floor and debt reduction is only part of the overall strategy."
