HM Sampoerna's Local Currency Credit Rating Raised

HM Sampoerna's Local Currency Credit Rating Raised

Bloomberg
Jakarta

PT H.M. Sampoerna, Indonesia's biggest cigarette maker by
market value, had its local currency credit rating raised two
levels to 'BB' by Standard & Poor's, two levels below investment
grade.

The rating company reiterated its B+ rating for Sampoerna's
foreign currency debt, four levels below investment grade.

Net income at Surabaya-based Sampoerna rose 43 percent to Rp
1.73 trillion (US$192 million) in the first nine months of this
year after it raised prices and demand for its 'A Mild' brand
increased.

"Despite intense competition, Sampoerna is the third-largest
cigarette company in Indonesia, with a 19 percent share of the
domestic market," S&P said in the statement. "The company has
also closed in on market leader, PT Gudang Garam, narrowing the
gap in market share to 10 percent, from 27 percent in 1997."

"Its focused marketing strategy is evident in its success of
capturing a large share of the low tar-low nicotine and affluent
urban smoker segments, which generally are less sensitive to
price changes," the rating company said.

At the end of September, Sampoerna was in a net cash position,
compared with a net debt to net capital ratio of 7 percent at the
end of 2003, S&P said.

S&P maintained a 'stable' rating outlook for the company.

Sampoerna in October sold 1 trillion rupiah of five-year
bonds.

S&P today also affirmed its 'B+' long-term rating on PT
Excelcomindo Pratama, Indonesia's third-largest provider of
cellular phone services with a 15 percent market share.

"The company's customer base has expanded at a compounded
annual growth rate of over 50 percent in the past four years to
4.2 million subscribers," said S&P credit analyst Yasmin
Wirjawan.

"With a population of 230 million and cellular market
penetration of only 12 percent, there are good growth prospects
for Indonesia's wireless market," she said. "Excelcomindo stands
to benefit from this opportunity as an existing player, but will
continue to face intense pricing competition from existing
cellular and fixed wireless service providers."

PT Telekomunikasi Indonesia, the largest company on the
country's stock exchange, and smaller rival PT Indonesia
Satellite, had their local currency rating raised two levels to
BB by S&P, two levels below investment grade. The rating company
reiterated its B+ rating for both companies' foreign-currency
debt, four levels below investment grade.

Telkom shares rose Rp 100, or 2 percent, to Rp 5100, matching
a record reached on Nov. 24. Indosat shares fell Rp 50, or 0.9
percent, to Rp 5700.