Tassnief affirms Mobily's 'AA-' rating, assigns Zain KSA 'A'

Simah Rating Agency (Tassnief) assigned Etihad Etisalat Co. (Mobily) “AA- (pi)” rating on the long-term and "T-2" on the short-term. Meanwhile, it assigned Mobile Telecommunication Company Saudi Arabia (Zain KSA) “A (pi) ” and “T-2” on the long and short terms, respectively.

In separate statements, the brokerage said the two companies' long-term ratings reflect a strong credit profile characterized by high creditworthiness and low credit risk.

Mobily’s rating reflects the teleco’s distinguished status in the market, satisfactory network coverage, acceptable business risks and strong financial risk data, and a strong governance framework, Tassnief said.

It added that Mobily's financial profile has witnessed improvement, especially with regard to financial leverage and coverage ratios, buoyed by healthy cash flows.

In the future, the rating will depend on the company's ability to strengthen its market position and implement the business strategy, as well as its ability to maintain the recent improvement in financial metrics including profitability, liquidity and capitalization, Tassnief said.

Zain KSA’s rating reflects a stable subscriber base, satisfactory network coverage, reasonable business and financial risks, and a strong governance framework.

The company's revenues rose in 2022, 2023 and 2024, with growth expected to continue in the future, while its financial metrics are acceptable but relatively lower compared to its peers, Tassnief said.

Zain KSA’s free cash flows have declined, due to the decrease in operating cash flow and the increase in capital spending, it added.

Looking ahead, the company's rating will continue to be influenced by its strengthening market position and the continual improvements in profitability, the brokerage said, adding that the increase in free cash flow generation may represent a key indicator for upgrading the rating.

Tassnief also stated that the Pi rating is based on the disclosures issued by the company, in addition to other secondary sources, and does not carry future expectations, noting that it is reviewed based on the latest financial data or in the case that the company witnesses a change that may affect its credit quality.