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.