Bangkok--29 Mar--Moody's Investors
Approximately USD690 million of debt securities affected
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Moody's Investors Service says there is noimmediate impact on the B2 corporate family rating of True CorporationPublic Company Limited and the B2 corporate family and senior unsecuredbond ratings of True Move Company Limited after the rights issue by TrueCorp.
Any longer term credit impact will depend on the amount raised from therights issue as well as how the proceeds are used. Positive implicationscould arise if True Corp successfully rolls out its 3G initiative,recapitalizes True Move and eases its ongoing liquidity pressures, andpermanently resolves True Move's ongoing need for continuous covenant waivers.
Nevertheless, any positive implications could be negated by broaderconsiderations including Thailand's uncertain regulatory environment.The outlook on all ratings remains negative.True Corp announced that it expected to raise up to THB13.1 billionthrough the rights issue to existing shareholders on a pro-rata basis.
If successful, the proceeds will be used to fund True Corp's 3G capitalexpenditure and repay outstanding debt. True Corp has budgeted THB10billion for the group's 2011 capital expenditure program.
Moody's notes that the rights issue has not been underwritten and themajor shareholder has not indicated their intention to retain their shareholding portion.The proposed rights issue of 6,727,436,752 new ordinary shares comprisesthe unsubscribed shares from the previous rights issue in February 2009.
The negative outlook reflects True Move's poor liquidity, its ongoingneed to seek covenant waivers from its bankers, the need for furtherequity injections, as well as the regulatory uncertainty in Thailand.True Move's credit profile is highly correlated with True Corp's, giventheir strong financial and operating links, and as such their ratings areequalized.
Moody's is also concerned about the execution risks in the HSPA 3Gupgrade and the migration of subscribers from the CDMA network to the newHSPA platform.
Thailand's regulatory environment remains uncertain and there is noindication whether True Move could migrate its subscribers to the newnetwork before its concession expires in September 2013.
Moody's last rating actions on True Corp and True Move were taken onJanuary 31, 2011 when the ratings of both companies were affirmed at B2,with a negative outlook.
The principal methodology used in this rating was Moody's GlobalTelecommunications Industry, published in December 2010.
Headquartered in Bangkok, True Corp is an integrated provider offixed-line, broadband, internet, and mobile services, and pay TV. TrueCorp is listed on the Thai Stock Exchange; the Charoen Pokphand Group (CPGroup) is the major shareholder (64.74%).
Its wireless business is conducted predominantly through its 98.9%-ownedsubsidiary, True Move, Thailand's third largest mobile telecommunicationsoperator. Its pay TV business is conducted through 99.3%-owned TrueVisions Public Company Limited (and 99.0%-owned True Visions Cable PublicCompany Limited), which is currently the only nationwide provider of paytelevision services in the country.