Moody's says outlook for Asia-Pacific telecoms stable, but changes ahead

Bangkok--1 Dec--Moody's Investors Moody's Investors Service says that the outlook for the telecommunications sector in Asia-Pacific is stable, but various changes -- some of which are likely to be major -- lie ahead. "Across all markets in the region, the ever-quickening pace of change, of technological evolution, creates risks in execution," says Laura Acres, a Moody's Vice President and Senior Credit Officer. "Massive demand for mobile, content-rich services and shifting patterns of consumers' preferences create new opportunities, but also present difficulties in satisfying the market," says Acres. The current stable outlook reflects the continued resiliency of the industry's financial and operating profile together with issuers ongoing strong access to bank and capital markets. Acres was speaking on the release of Moody's latest outlook -- which she co-authored -- on the Asia-Pacific telecoms sector. The report looks at key themes such as industry trends and rating implications, capital expenditure, the regulatory landscape, the prospects for M&As, and liquidity profiles. Moody's rates a total of 24 telecommunications companies in Asia Pacific -- which includes Australasia and Japan -- and ratings range from Aa1 to B2. In its examination of trends in the industry, the report notes that rising data usage, fueled by the uptake of smart phones and mobile broadband in Asia Pacific, is increasing average revenue per user (ARPU), but also raising the requirements for capital expenditure to expand capacity to handle the increasing traffic loads. As a result, Moody's expects capex for regional carriers to plateau at high levels in contrast to the peaks and troughs that characterized earlier business cycles. Meanwhile, interventions by regulators to lower consumers' costs and increase innovation through more competition have spurred growth and investment in some markets, often at the expense of operator margins, the report says. "And while regulatory change may ultimately bring benefits, the change itself, or delays in effecting the change, create uncertainty in many markets, and thus adds a mix of negative to potentially positive credit implications," says Ian Lewis, a Moody's Vice President and Senior Credit Officer, and co-author of the report. On M&As, the report says that they are taking a backseat to operators'own investments. The report is entitled, "Asia-Pacific Telecoms: Stable, but Changes Ahead." It can be found at www.moodys.com Hong Kong Laura Acres VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Hong Kong Ltd. JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 Sydney Ian Lewis VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Pty Ltd JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Moody's Investors Service Hong Kong Ltd. 24/F One Pacific Place 88 Queensway Hong Kong China (Hong Kong S.A.R.)