Research: Rating Action: Moody’s raises Melita’s rating to B2; stable outlook


Madrid, June 28, 2022 — Moody’s Investors Service (“Moody’s”) today upgraded the rating of the €275 million Senior Secured Term Loan (TL) and Credit Facility from B3 to B2 €20 million renewable senior guarantee (RCF), both due in 2026, raised by Melita Limited (“Melita” or “the Company”), the holding company of Maltese telecommunications operator Melita.

Concurrently, Moody’s has assigned a B2 corporate family rating (“CFR”) and a B2-PD probability of default (“PDR”) rating to Melita Limited, and has removed the B3 CFR and B3-PD PDR rating from Melita BidCo Limited. Melita Limited’s ratings outlook remains stable.

A full list of affected ratings is provided towards the end of this press release.

“The upgrade to B2 reflects Melita’s strong operational performance since the initial rating assignment and despite the challenging operating environment caused by the pandemic,” said Carlos Winzer, Moody’s Senior Vice President and Principal Analyst for Melita.

“As a result, its leverage has fallen from 6.3x in 2019 to 5.7x in 2021, and we expect the company to continue to deleverage, supported by its strong market position, high margins and generation. positive free cash flow,” added Mr. Winzer.


Melita’s B2 rating reflects: (1) its leading position in the fixed broadband and pay-TV segments with a challenger position in the Maltese mobile market; (2) a fully convergent offering supported by a high-quality broadband network and rich pay-TV content; (3) Moody’s expectation of continued revenue and EBITDA growth supported by improved network quality and growth prospects in the B2B market; (4) its high margin relative to its peers and positive free cash flow generation; (5) its good liquidity profile; and (6) Moody’s expects the company to maintain a deleveraging path in the absence of aggressive shareholder compensation policies.

These strengths are offset by: (1) the limited size of the business due to the size of the Maltese telecommunications market, one of the smallest in Europe; (2) its lack of significant geographic diversification outside of the domestic market, offset by the growth of the IoT business; (3) its high Moody’s adjusted leverage of 5.7x in 2021; and (4) its high investment intensity, which will be gradually reduced as the company completes its network upgrade and expands its 5G network.

Melita’s competitive positioning in Malta, as a fully converged operator, is strong and supported by its high quality network (both mobile and fixed), and its premium content offering as well as its affordable price proposition. This enabled the company to retain its number one position in the fixed broadband and pay-TV segments and to increase its market share in mobile.

Moody’s expects Melita’s adjusted debt to reach 5.3x in 2022 and continue to improve towards 5.0x in 2023, supported by revenue and EBITDA growth and the absence of distributions in species. This is underpinned by the strong growth prospects in the B2B segment where Melita’s positioning is currently underdeveloped compared to its main competitors.


Melita’s liquidity profile is good, supported by a cash balance of €23 million, improved cash flow generation and an extended maturity profile with no significant debt maturities through 2026.

The company has access to a relatively small secured senior RCF of €20 million, which remains undrawn and is subject to an elastic leverage clause (set at 8.33x net debt/EBITDA), which will only be tested when the facility will be drawn by over more than 40%. Moody’s expects the capacity under the covenant to be comfortable and to increase over time.


The B2-PD PD rating reflects Moody’s assumption of a 50% family recovery rate, due to the covenant lite nature of the senior secured term loan.

The Senior Secured TL and Senior Secured RCF are rated B2 because they are pari-passu rated and share the same security package, which Moody’s says is quite weak given that it is mostly collateral. of shares.


The stable ratings outlook reflects Moody’s expectation that Melita will organically deleverage towards 5.0x by 2023, driven by continued improvement in operating performance, while the company will at least maintain an adequate liquidity profile. .


A rating upgrade would depend on: (1) consistent and sustained improvements in underlying operating performance and (2) continued positive free cash flow generation leading to a more conservative leverage profile trending towards 4 .25x on a sustainable basis.

Downward pressure could arise if Melita’s operating performance weakens due to a slower than expected economic outlook in Malta, a more aggressive competitive environment in the country and/or an underperformance against its business plan, such that (1) its gross debt/EBITDA adjusted by Moody’s increases sustainably above 5.25x; (2) free cash flow generation materially weakens on a sustained basis and/or (3) liquidity deteriorates significantly.


Updates :

..Issuer: Melita Limited

….Secured senior bank credit facility, upgrade from B2 to B3


..Issuer: Melita Limited

…. Default scoring probability, assigned B2-PD

…. Ranking of the LT family of companies, awarded B2


..Issuer: Melita BidCo Limited

…. Probability of default rating, withdrawn, previously rated B3-PD

…. LT Corporate Family Rating, Withdrawn, previously rated B3

Outlook Actions:

..Issuer: Melita Limited

….Outlook remains stable

..Issuer: Melita BidCo Limited

…. Outlook, changed to rating removed from stable


The main methodology used in these ratings was that of telecommunications service providers published in January 2017 and available on You can also visit the Scoring Methodologies page at for a copy of this methodology.


Melita is one of the leading integrated telecommunications providers in Malta. The company offers a full range of integrated services such as fixed, mobile and pay-TV offers to residential and business customers. Melita provides 1 Gbps broadband speeds across the country through its cable network. The company is owned by private equity sponsor EQT Partners, which acquired it from Apax Partners and Fortino Capital in 2019. In 2021, Melita generated revenue and reported EBITDA of €92.2 million and 57.3 million euros, respectively.


For details on key rating assumptions and Moody’s sensitivity analysis, see the Methodological Assumptions and Sensitivity to Assumptions sections in the Disclosure Form. Rating symbols and definitions from Moody’s are available at

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Carlos Winzer
Senior Vice President
Corporate Finance Group
Moody’s Investors Service Spain, SA
Calle Principe de Vergara, 131, 6 Planta
Madrid, 28002
JOURNALISTS: 44 20 7772 5456
Customer service: 44 20 7772 5454

Ivan Palacios
Associate General Manager
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Customer service: 44 20 7772 5454

Release Office:
Moody’s Investors Service Spain, SA
Calle Principe de Vergara, 131, 6 Planta
Madrid, 28002
JOURNALISTS: 44 20 7772 5456
Customer service: 44 20 7772 5454


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