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March 3, 2008 |
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SRI LANKA TELECOM: Fitch Assigns Neg. Outlook on BB- Rating Fitch Ratings has said that its overall outlook for the Asia Pacific telecommunication sector in 2008 is stable, with 24 out of its total 28 rated telecommunications issuers bearing a Stable Outlook. Highlighting its newly published "Asia-Pacific Telecoms Credit Outlook 2008" 20 page report, the agency outlines its expectations on how key financial metrics will move for 26 operators across Asia-Pacific in 2008, concluding that while revenue growth is likely to slow, cash flow from operations and free cash flow after dividends are likely to rise on aggregate. Nevertheless the agency cautioned that it expects FCF to actually fall for half of its rated operators across Asia Pacific. "While 24 out of our 28 rated telecom issuers have a Stable Outlook, and average leverage levels are expected to remain flat at 1.2x, this is not to say that the sector will be quiet, but rather reflects our view that the operators are relatively well-positioned to manage the risks," says Matt Jamieson, senior director and head of Fitch's Asia-Pacific telecommunications, media and technology team. Fitch believes the overall themes for 2008 will be competition, regulation, M&A and new technologies. Mr. Jamieson emphasized that "a key aspect of our report is the upfront inclusion of summary tables detailing Fitch's view of how revenue growth, EBITDA margins, leverage, CFO, capex, dividends and FCF are likely to trend in 2008," for the 26 operators across Asia-Pacific where Fitch's financial forecasts are current. "So rather than merely reviewing 2007's financial performance, we are also providing a greater degree of clarity on our financial forecasts for 2008 which form an important part of our rating process," he added. Specifically, Fitch expects average revenue growth to slow to 5.2% in 2008 from 9.4% in 2007, largely associated with declines in fixed and mobile average revenue per user as competitive and regulatory factors force tariffs downwards. Nevertheless, Fitch expects a number of operators in the emerging markets to record strong revenue growth in 2008. In Sri Lanka, the agency is concerned about the weakened macroeconomic environment and security situation, and accordingly, Sri Lanka Telecom (BB-) is assigned a negative outlook. |
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