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(Alliance News) - Moody's Investors Service affirmed BT Group PLC's debt rating on Friday, but downgraded its outlook to negative from stable as it predicts the telecommunication firm's revenue will stay "under pressure" this financial year.
BT, which has a Baa2 senior unsecured rating from Moody's, will deal with tough competition and regulatory headwinds in the year ending March 31, and beyond.
The credit ratings agency noted that regulatory changes will affect BT's Consumer unit, which provides services such as broadband, television and mobile phones to millions of customers in the UK.
The Enterprise unit, which serves public sector organisations in the UK and Republic of Ireland, has already seen a "structural decline", Moody's said.
Moody's lead analyst for BT Sebastien Cieniewski also noted the execution risks and costs associated with the ramp-up of BT's fibre rollout.
He added however that "investment is important to enhance the company's product offering partly to fend off increasing competition from alternative network providers".
These issues, Moody's explained, are mitigated by the FTSE 100 firm's "strong business profile" in the UK telecommunications market.
In January, BT reported its revenue for the nine months to December fell 2% to GBP17.25 billion, with pretax profit down 8.6% at GBP1.91 billion.
Adjusted earnings before interest, tax, depreciation, and amortisation was 3% lower at GBP5.90 billion, while normalised free cash flow fell 42% to GBP1.00 billion in part due to a deposit for the rights to televise European football.
In November, BT said it forked out GBP1.2 billion in a monster deal to retain the broadcasting rights for European football's premier club competitions from 2021 until 2024.
BT shares were 1.0% lower at 155.29 pence each in London on Friday morning.
By Eric Cunha; ericcunha@alliancenews.com
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