Bangkok--26 Dec--Fitch Ratings
Fitch Ratings (Thailand) Limited has assigned Thailand-based telecom company Advanced Info Service Public Company Limited’s (AIS) existing senior unsecured debentures ratings as follows:
Senior unsecured debentures of THB4bn due 2013 (No.2/2006) at ‘AA(tha)’
Senior unsecured debentures of THB4bn due 2013 (No.1/2008) at ‘AA(tha)’
Senior unsecured debentures of THB5bn due 2012 (No.1/2009) at ‘AA(tha)’
Senior unsecured debentures of THB2.5bn due 2014 (No.2/2009) at ‘AA(tha)’
The ratings reflect AIS’s strong market position as Thailand’s largest mobile operator with a revenue market share of 52% in 2010 and a competitive cost structure. This is supported by its strong branding and extensive network coverage.
The ratings are also underpinned by AIS’s solid financial position. For 9M11, AIS’s revenue and operating EBITDAR grew 14.9% and 10.8% yoy, respectively, supported by strong growth in non-voice revenue which helped offset a slowdown in the traditional voice segment. With strong cash flow generation, AIS’s funds from operations (FFO)-adjusted net leverage improved to 0.3x at end-9M11 from 0.6x at end-2010. However, Fitch expects FFO-adjusted net leverage to increase to 0.5x at end-2011, following payment of a revenue-sharing fee in Q411.
Despite its large 3G investment for the next three years, AIS should continue to generate solid operating cash flow and maintain low financial leverage in the medium term. Fitch believes that AIS’s current low level of financial leverage should provide flexibility to absorb the new investment.
Key credit risks include uncertainty over regulatory, policy and legal issues. These include the pending review of concession amendments, tighter restrictions on foreign ownership and 2G concession expiry. Furthermore, an increase in competition in the cellular market could affect margins.
Contacts:
Primary Analyst
Obboon Thirachit
Associate Director
+66 2655 4757
Fitch Ratings (Thailand) Limited
Wave Place 13th Fl., Wireless Road
Lumpini, Patumwan
Bangkok 10330
Secondary Analyst
Pimrumpai Panyarachun
Associate Director
+66 2655 4752
Committee Chairperson
Vicky Melbourne
Senior Director
+61 2 8256 0325