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December 12, 2007 |
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EXCELCOMINDO PRATAMA: S&P Affirms 'BB-' Corporate Credit Ratings Standard & Poor's Ratings Services said today it affirmed its 'BB-' corporate credit ratings on Indonesian cellular operator, PT Excelcomindo Pratama Tbk, and removed them from CreditWatch with negative implications. The outlook is stable. The 'BB-' ratings on all foreign currency senior unsecured debt were also affirmed. The ratings were placed on CreditWatch with negative implications on Oct. 1, 2007, following XL's parent company announcement that it planned to spin off its cellular and international operations. The ratings on Excelcomindo no longer factor in the potential financial support from the parent company, Telekom Malaysia Bhd. (foreign currency A- /Positive/--; local currency A/Stable/--). Telekom Malaysia's outstanding debt securities, which have a cross default clause to its subsidiaries, will not be applicable to XL post–demerger, as the latter will be transferred to the new cellular entity. The rating on XL reflects the company's aggressive capital expenditure program, increasing competition in the wireless market, and significant foreign currency exposure. These factors are partially offset by XL's established costumer base and improved network coverage, and by its strong domestic wireless growth prospects. "The ratings actions are based on XL's improvement in business risk profile following the company's expanded network coverage and greater economies of scale," said Standard & Poor's credit analyst Yasmin Wirjawan. "This action also reflects expectations that XL's credit metrics will remain within the current rating category, despite high capital spending in the near term." XL's liquidity is adequate. The company had cash and cash equivalent of IDR0.6 trillion at Sept. 30, 2007, with no debt due in one year. As of Sept. 30, 2007, it had unused committed facilities equivalent to approximately US$150 million, which will be used largely to finance its capital expenditures. "The outlook or rating will be negatively pressured if there is a material deterioration in the company's operating performance and higher-than-anticipated debt for capital spending that results in material deterioration of its financial metrics, including debt to EBITDA of 3.5x or above on a sustainable basis. On the other hand, an upgrade will be considered if the company is able to improve its financial metrics, including debt to EBITDA at about 2x," Ms. Wirjawan noted. About Excelcomidndo Headquartered in Jakarta, Indonesia, PT Excelcomindo Pratama Tbk -- http://www.xl.co.id/ -- provides wireless telecommunications services, leased lines and corporate services, which include Internet Service Provider (ISP) and Voice over Internet Protocol services. In addition, Excelcomindo provides voice, data and other value-added cellular telecommunications services. Its product lines include jempol, bebas and xplor. The company also provides services that allow its customers to purchase electronic voucher reloads at all of its centers and outlets, automated teller machines of various major banks and through its all centers. Excelcomindo starter packs and voucher reloads are also sold by independent retailers. Excelcomindo is Indonesia's third-largest cellular operator; as at the first quarter of 2006 the company had 8.2 million subscribers representing total market share of around 15% but with cellular revenue market share of approximately 10%. TM and its parent Khazanah together hold 73.7% in XL. |
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