S&P pulls Satelindo from the Creditwatch

S&P pulls Satelindo from the Creditwatch

JAKARTA (Dow Jones): Standard & Poor's Corp. said Friday it
has raised its long-term corporate credit rating on Indonesian
cellular operator PT Satelindo to CCC from CCC-, and removed the
rating from CreditWatch, where it was placed in May 1998.

The rating revision reflects the successful completion of
Satelindo's debt restructuring, the relatively healthy growth in
the company's subscriber numbers, the growth potential for mobile
telephony in the country, and the continued presence of Deutsche
Telekom AG as a strategic partner, it said.

These positive factors are offset by the vulnerability of the
company's foreign currency debt obligations to volatility in the
Indonesian rupiah, and a crucial dependence on a sustained
favorable operating cash flow to meet the still significant, but
manageable, levels of debt maturing in the near term, it said.

Satelindo signed a restructuring agreement with its creditors
May 30 which, among other things, extends the maturity schedule
of about US$583 million of debt outstanding.

The obligations will be amortized over the next six years,
easing pressure on the company's cash-flow and allowing
management to focus on expanding its business, it said.

Indonesia's massive economic and political crises over the
past two years and the fall in the rupiah have only moderately
impacted Satelindo's operations, S&P said.

Its cellular subscriber base in 1999 doubled year-on-year to
745,000 as a result of the successful launch of its prepaid
service. Subscribers currently number about 800,000.

Deutsche Telekom is expected to continue supporting the
company operationally and exerting some financial discipline.
However, Satelindo remains vulnerable to fluctuations in the
rupiah, it said.

Although a portion of its revenues from international long-
distance and satellite services is denominated in U.S. dollars,
which comfortably cover certain U.S.-dollar operating costs, its
U.S.-dollar debt obligations are unhedged, it said.