'Credit profile of mobile operators improves'

'Credit profile of mobile operators improves'

Agence France-Presse, Manila

Mobile telephone operators in Southeast Asia are significantly
improving their credit profiles on the back of growing subscriber
bases and revenues, Moody's Investors Service said on Monday.

The ratings agency said all its rated mobile phone issuers in
the region exhibited enhanced financial conditions, benefiting
from a strong uptake in cellular telecommunications in
essentially under-penetrated environments.

According to a Moody's study, mobile phones have now become
the principal mode for voice transmission in Thailand, Indonesia,
Malaysia and the Philippines.

The study covered only the region's four emerging economies
and excluded Singapore, whose cellular market is one of the most
competitive in Asia, marked by high penetration rate, with eight
out of 10 residents in the city state a mobile subscriber.

"Most major operators in these countries -- by achieving
critical subscriber mass -- have secured greater certainty in
their abilities to fund growth, access capital markets to
refinance maturing debt and provide investors with returns," says
Charles Macgregor, Moody's vice president and senior credit
officer.

"Consequently, Moody's believes that the ability of operators
to meet their funding needs -- covering investments and maturing
debt -- has become a diminishing concern," Macgregor said.

The report said the credit profiles of the region's mobile
operators had improved in the six years since the 1997-1998 Asian
financial crisis, partly reflecting enhanced economic
fundamentals and better technology.

"Going forward, given the healthier financial and operating
profiles, strategic investor support may not be as critical as
before," Moody's said.

"And now that the threat of corporate collapse has eased
dramatically, for most rated operators it is more an issue of
sustaining competitive positions."

However, the Moody's report also cautioned that the region's
operators were still exposed to "varying degrees of risk from
macroeconomic trends, political volatility, and to a lesser
extent foreign exchange moves and regulatory changes."

The region's regulatory environments currently pose a
"moderate level of risk," Moody's said.

In the coming 12 to 24 months, Moody's said, decisions by
regulators -- centering on tariffs and interconnections -- were
likely to be the next source of regulatory impact on credit
profiles.

Other challenges include the need to cut costs to grow profits
as cellular penetration nears saturation, greater sensitivity to
economic activity, shareholder pressure for higher returns and
regulatory pressure to keep tariffs low.

Macgregor noted the region's telecoms regimes continued to
evolve and that the importance of earlier concerns -- such as
liberalization time frames and competitor numbers -- had become
less significant.

"Uncertainties, however, over issues such as tariff
structures, taxation, access and interconnection regimes
persist," he said.