Scope Ratings calls for comments on its proposed European Telecommunication Services Rating Methodology from market participants by 20 January 2026. The new methodology improves credit differentiation through an industry-specific credit risk evaluation and a more detailed and nuanced assessment of credit factors. Scope’s approach improves transparency and highlights the relative importance of key rating drivers when analysing European telecom corporates.

The proposed methodology can be downloaded here or on www.scoperatings.com.

Methodology highlights

The proposed methodology introduces new rating factors relevant to the determination of a telecommunication services company’s business risk profile. It provides guidance on the competitive position assessment, which for the telecommunications industry is based on three areas:

1. Market positioning: scale of operations, market shares in different geographies and segments and level of competition in the markets in which the telecom company operates;
    
2. Diversification: exposure to different regions, types of customers and segments are key rating factors;
    
3. Operating profitability: Assessed through i) EBITDA-AL (EBITDA after leases) margin ranges to capture efficiency of operations, ii) return on capital employed, a complementary profitability measure that is also an indicator of capital efficiency and enables comparison across the industry, and iii) volatility in margins.

Additionally, the proposed methodology incorporates an assessment of whether the regulatory framework under which the issuer operates is favourable or unfavourable for its business risk profile. A neutral assessment of regulatory risk is to be expected in cases where the regulatory framework is fairly evolved and stable, while a negative adjustment could be made for an issuer’s business risk profile assessment if regulations are adversely impacting its operations and cash flows, or are reasonably likely to do so over the forecast period.

The proposed methodology should be read in conjunction with the General Corporate Rating Methodology, which provides rating factors common to all industries such as management, liquidity, legal structure, governance and country risks.

The methodology will apply to new and existing issuers currently rated based on the General Corporate Rating Methodology. It is expected to have no impact, if implemented as proposed.

Call for comments

Scope invites issuers, investors and other interested parties to comment on the methodology by 20 January 2026 as part of the agency’s ongoing commitment to transparency and open dialogue with market participants.

Please send your comments to consultation@scoperatings.com. Scope will review the comments and will publish the final methodology thereafter.