According to Fitch Ratings, should Vodafone acquire Kabel Deutschland Holding without undertaking any moves towards debt reduction, the company's rating could be downgraded a notch.
Fitch Rating said that the Kabel purchsse would increase the company's FFO adjusted net leverage to a level that is above what is applicable to the current rating of the British telecommunications firm of 'A-'/Stable rating. While Kabel Deutschland may have generated Eur848 million of adjusted EBITDA for the year prior to December 2012, this can result in the outlay of Eur10 billion for Vodafone even without assumption of new debt.
In order to retain their credit ratings level, Fitch recommends the sale of some or all of its shareholdings in Verizon Wireless. This is important because Germany is the largest market for Vodafone. The acquisition of Kabel would provide Vodafone have a high speed broadband network that can provide the firm the necessary tools to competer with other telecommunications firms such as Deutsche Telekom.
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