At the same time, Standard & Poor's lowered its debt rating on the EUR400 million senior secured notes to 'B+' from 'BB-'. The debt rating on Cell C's senior subordinated notes was also lowered by one notch, to 'CCC+' from 'B- '. "The recovery rating of '1' on the senior secured notes was affirmed, indicating our expectation of full recovery of principal for senior secured bondholders in the event of a payment default. "The downgrade follows weaker-than-expected growth in operating cash flows in 2005 and the first quarter of 2006 resulting in both deleveraging and free cash generation being delayed," said Standard & Poor's credit analyst Simon Redmond. Cell C continues to face an aggressive competitive environment and additional costs in 2006 while still needing to grow its operating cash flows significantly to become self funding. The company's capacity to absorb adverse currency or other shocks is very limited.