Fitch Ratings has revised
The rating action follows the revision of the Outlook on
The ratings affirmation also follows the update of Fitch's Corporate Rating Criteria and the Sector Navigators - Addendum to the Corporate Rating Criteria on
Key Rating Drivers
For key ratings drivers and ESG considerations for TT, see the Rating Action Commentary (RAC) 'Fitch Affirms Turk Telekom at 'BB-'; Stable Outlook' dated
Peer Analysis
See 'Fitch Affirms Turk Telekom at 'BB-'; Stable Outlook' dated
Fitch's Key Rating-Case Assumptions
See the RAC referenced above.
Corporate Rating Tool Inputs and Scores
Fitch scored TT as follows, using our Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP):
The business and financial profile factors (score, relative importance) are management ('bbb', lower), sector characteristics ('bbb', lower), market and competitive positioning ('bbb+', higher), diversification and asset quality ('bb+', moderate), company operational characteristics ('bb+', moderate), profitability ('bbb+', lower), financial structure ('bb', moderate), and financial flexibility ('bb', higher).
The quantitative financial subfactors are based on custom CRT financial period parameters: 20% weight for forecast FY25, 40% for forecast FY26 and 40% for forecast FY27.
The governance assessment of 'good' results in no adjustment.
The operating environment assessment of 'bb-' results in an adjustment of -1 notch.
The SCP is 'bb'.
To derive the IDR:
Application of Fitch's Parent Subsidiary Linkage (PSL) Rating Criteria results in a consolidated profile +1 approach.
Application of Fitch's Government Related Entities Rating Criteria results in a standalone approach.
Country Ceiling considerations apply and result in an adjustment of -1 notch.
Recovery Analysis
See the RAC referenced above.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
EBITDA net leverage above 3.2x on a sustained basis
Material deterioration in pre-dividend free cash flow margin or in the regulatory or operating environments
Negative action on Turkiye's Country Ceiling or Long-Term Local Currency IDR, which could lead to a corresponding action on TT's Long-Term Foreign- or Local-Currency IDRs
Increased FX mismatch between TT's net debt and cash flows especially if combined with excessive reliance on short-term funding, without adequate liquidity over the next 12-18 months
Removal of covenants in debt documentation may lead to a change in PSL assessment, which could result in the IDRs being capped by the sovereign IDRs
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Positive rating action on Turkiye would lead to a corresponding action on TT, provided that TT's SCP is at the same level as, or higher than, the sovereign rating, and the links between the government and TT remain unchanged
Decreased currency mismatch between TT's net debt and cash flows or more effective hedging may lead to a positive action on the SCP, but not necessarily the IDR
Liquidity and Debt Structure
See the RAC referenced above.
Issuer Profile
TT is an incumbent fixed-line operator in Turkiye, with a range of mobile, broadband, data, TV and fixed-voice services. It is controlled by the Turkish government with an effective control of 85%.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
TT's ratings are linked to the sovereign ratings of Turkiye, in particular its LTFC IDR, which is capped by Turkiye's Country Ceiling.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
Climate Vulnerability Signals
The results of our Climate.VS screener did not indicate an elevated risk for TT.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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