State-controlled Telekom Srbija plans to raise €1.95bn through a new bond issue, with Moody's Ratings assigning a B1 rating to the proposed senior unsecured notes, citing a strong market position.

The bonds will be issued in three tranches maturing in 2031, 2033 and 2036, Moody’s said on May 6, confirming the company’s corporate rating at B1 with a stable outlook. Proceeds will be used to refinance existing debt and cover transaction-related costs.

Moody’s said the rating reflects Telekom Srbija’s leading position across Serbia, Bosnia and Montenegro, as well as its expanding media footprint following acquisitions of assets from United Group and exclusive sports broadcasting rights in the Western Balkans.

The company reported strong operating performance in 2025, with revenue rising 28% and earnings before interest, taxes, depreciation and amortisation (EBITDA) up 55%, driven by acquisitions and price increases. The Serbian state, which holds a 58.11% stake, provides additional support to the credit profile, Moody’s added.

However, the agency flagged elevated leverage and heavy capital spending as key risks. Telekom Srbija’s adjusted gross leverage stood at 4.4 times in 2025, while high investment in 5G rollout, customer migration and sports content contributed to negative free cash flow of around €900mn.

Despite liquidity of about €254mn in cash as of March 2026 and €673mn in available credit lines, the company is likely to return to capital markets within two years to address debt maturities due in 2028, Moody’s said.

Telekom Srbija previously tapped international markets in October 2024, issuing $900mn in Eurobonds listed in Dublin to refinance existing liabilities.

Separately, Fitch Ratings said it had upgraded Telekom Srbija’s long-term issuer default rating to BB- from B+, with a stable outlook on May 6, and assigned an expected BB-(EXP) rating to the planned notes, also citing refinancing plans and solid operating performance.

Moody’s said the stable outlook assumes continued revenue and EBITDA growth over the next two years, which should gradually reduce leverage. The rating could come under pressure if debt levels rise further or refinancing risks increase, or if Serbia’s sovereign creditworthiness weakens.