S&P cuts key Nokia ratings
New York, July 6, 2013
Standard & Poor's downgraded Nokia further into junk territory, warning that the Finnish telecom firm's plan to take over Siemens' stake in their joint network equipment venture would strain its finances.
The ratings agency downgraded the one-time tech darling by one notch to B+ from BB- citing pressure on its net cash after Nokia said on Monday it would buy Siemens' 50 per cent share in Nokia Siemens Networks.
Nokia is betting on the technology to run 4G networks as it struggles in the smartphones business. But the buy-out strains a balance sheet already under pressure from a loss-making handset business, which could burn through its cash as soon as next year.
"We now anticipate Nokia's net cash could be as low as 1.3 billion euros ($1.6 billion) at the end of 2013," S&P said.
The stable outlook assumes a significant reduction in cash losses and gradual market share improvement, S&P said.
In a comment on the S&P move, Nokia said its gross and net financial position remained strong, and noted it also had access to additional cash via an undrawn credit facility.
"We will continue to prudently manage our cash resources post-transaction," Nokia said on its website.-Reuters