The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has affirmed the BB-/Stable issuer rating on 4iG Nyrt. Scope has also affirmed 4iG’s BB- senior unsecured debt rating.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

Business risk profile: BBB- (unchanged). Scope maintains its overall view as business fundamentals remain broadly unchanged since the last review. 4iG’s business risk profile continues to support its standalone credit assessment, underpinned by stable telecom operations and a solid market position in Hungary. Despite improved profitability from its strategic shift from pure IT to Telco-focused business, limited diversification and still-moderate margins compared to peers remain key constraints.

In 2024, 4iG booked Scope-adjusted EBITDA* of over HUF 230bn, representing an approximate 28% increase compared to 2023 and exceeding Scope’s projections. At the same time, the EBITDA margin improved to around 34%, up from 31% in 2023. This performance was supported by the full-year impact of previous acquisitions, an increase in average revenue per user (ARPU), and positive customer base dynamics. For 2025, Scope projects EBITDA to rise to around HUF 244bn, further supported by the abolition of the supplementary telecom tax, which was phased out from January 2025, with EBITDA expected to exceed HUF 255bn in subsequent years. The agency forecasts a slight improvement in profitability, with the EBITDA margin remaining below 35%, and an average EBITDA AL margin of around 29%.

Financial risk profile: B+ (unchanged). The group’s financial risk profile remains the weakest link in the standalone credit assessment. Scope believes the cancellation of the Spacecom transaction will support improved credit metrics by reducing near-term financing needs, as already reflected in the 2024 actual results and projections for the next two to three years. However, the agency maintains its financial risk assessment unchanged, reflecting a more conservative approach in light of the group’s financial policy and growth strategy, characterised by a track record of debt-funded acquisitions.

Debt (Scope’s calculation does not net cash and cash equivalents) stood at HUF 953.4bn at YE 2024, up from HUF 915.6bn at YE 2023, but remained below the previously expected HUF 1,000bn that had factored in the execution of the Spacecom debt settlement plan. Leverage (debt/EBITDA) improved to 4.1x (from 5.0x at YE 2023), also supported by higher EBITDA. Overall, the cancellation of the Spacecom transaction contributes to a more favourable debt position than initially projected. Scope expects leverage to fall slightly below 4.0x in 2025 and to continue gradually decline below 3.5x over the 2026-2027 forecasted period, driven by both a reduction in debt and projected EBITDA growth. This is also projected to drive a sustained improvement in funds from operations/debt which the agency expects around 22% on average over the 2025-2027 period (18% in 2024). However, this base case does not incorporate the potential impact of future debt-funded M&A or alternative projects, which could slow the deleveraging trajectory if materialised.

Debt protection, as measured by EBITDA interest cover, improved to 4.9x in 2024 from 3.4x in 2023, supported by lower net interest and higher EBITDA. Over the 2025–2027 period, the agency expects the projected EBITDA improvement to help sustain good debt protection levels, with EBITDA interest coverage anticipated in a range between 4.5x and 5.5x.

Cash flow cover remains the weakest link within the financial risk profile, with free operating cash flow/debt averaging 1% over the 2022-2024 period, though rising to 3% in 2024. Scope expects this ratio to stay at around 3% over the 2025–2027 period, as elevated capex, assumed at around HUF 120bn annually, continue to weigh on cash generation, even as margins improve.

Liquidity: adequate (unchanged). Scope views 4iG’s liquidity profile as adequate, with projected liquidity ratios exceeding 100% over the 2025–2027 period. Scheduled debt repayments of HUF 10.1bn in 2024, HUF 49bn in 2025, and HUF 52bn in 2027 are expected to be covered by available cash and cash equivalents, HUF 60.6bn as of December 2024, as well as positive free operating cash flow. Starting 2026, scheduled repayments increase compared to prior years due to the maturity of the first HUF 38bn instalment of bonds issued under the Hungarian National Bank’s Bond Funding for Growth Scheme. However, the agency expects these maturities to be refinanced, which supports the view of a manageable liquidity position. Nonetheless, liquidity challenges may arise in the event of significant working capital volatility, large capital expenditures, or M&A, particularly if debt maturities are not successfully refinanced.

Supplementary rating drivers: -1 notch (unchanged). Scope views 4iG’s financial policy as a negative rating driver, resulting in a one-notch negative adjustment to the standalone credit assessment. This view is driven by the company’s ambitious, debt-funded acquisitions over recent years and the associated execution and integration risks. Moreover, the maintenance of such assessment on the company’s financial policy reflects Scope’s cautious stance regarding 4iG’s investment phase over the next years. As such, the issuer rating will continue to incorporate the one-notch negative adjustment until the agency gains more confidence about the company’s investments and growth plans in the medium term.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s unchanged view of the group’s aggressive financial policy. It also reflects the agency’s expectation of an ongoing deleveraging, supported by the cancellation of the Spacecom transaction, with leverage (debt/EBITDA) expected to fall below 4.0x already in 2025. Furthermore, the Outlook assumes that 4iG will take the necessary steps to address its upcoming refinancing needs well in advance.

The upside scenarios for the ratings and Outlook are (collectively):

1. Improved view on financial policy driven by stabilisation of the group's structure and business model including no material M&A activity or other discretionary spendings.
    
2. Improved financial risk profile as signalled by a debt/EBITDA significantly below 4.0x on a sustained basis.

The downside scenarios for the ratings and Outlook are (individually):

1. Debt/EBITDA at or above 5x.
    
2. Significantly negative cash flow cover.

Debt rating

Scope has affirmed the BB- rating for senior unsecured debt which primarily relates to the two bonds issued by 4iG in March 2021 and December 2021, respectively, for HUF 15bn (ISIN:HU0000360276) and HUF 370bn (ISIN: HU0000361019) through the Hungarian Central Bank’s Bond Funding for Growth Scheme. The assessment incorporates the agency’s view on pressure exerted on recovery rates by i) pledges in favour of creditors, which could lead to restrictions on the transfer of funds within the group, and ii) future debt issuance will potentially be taking place at subsidiaries level, resulting in structural subordination of senior unsecured debt at 4iG level. This results in an average recovery value for this debt category based on a hypothetical default scenario at year-end 2026.

Environmental, social and governance (ESG) factors

Overall, ESG factors have no impact on this credit rating action.

All rating actions and rated entities

4iG Nyrt.

Issuer rating: BB-/Stable, affirmation

Senior unsecured debt rating: BB-, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodology used for these Credit Ratings and/or Outlook, (General Corporate Rating Methodology, 14 February 2025), is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Herta Loka, Associate Director
Person responsible for approval of the Credit Ratings: Philipp Wass, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 30 October 2019. The Credit Ratings/Outlook were last updated on 2 December 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.