Bangkok--23 Nov--Moody's Investors
Moody's Investors Service today affirmed True Corporation Public Company Limited's (True Corp.) Ba3 corporate family rating and at the same time changed the rating outlook to negative from stable. The change in the rating outlook has been driven by weaker than expected operating performance and a risk that True Corp. may be in breach of its lenders' financial covenants after March 31, 2007.
"The operating environment in Thailand continues to be challenging such
that True Corp's financial profile has been constrained and the company may be unable to comply with its lenders' financial covenants after March 31, 2007 as they currently stand," says Moody's Charles Macgregor, VP/Senior Credit Officer and lead analyst for the company.
The rating outlook could stabilise if the company is able to operate
comfortably within bank financial covenants both on an actual and prospective basis. Upward rating pressure could emerge in the medium term if True Corp. manages well its growth strategy in cellular operations, resulting in sustainable EBITDA margins at or about 40% and growth in free cash flow to reduce debt as planned. Key indicators for such improvements include RCF/debt in the range of 20-25% and FFO interest coverage above 4-5x.
The rating could undergo downward pressure if a) True Corp. experiences a significant deterioration in market share and ARPU - a scenario which could result from greater competition and further liberalization - thereby pressuring EBITDA margins below 35%, or b) True Corp. fails to reduce financial leverage, such that RCF/Debt falls under 10% and FFO interest coverage declines below 2.5x, c) refinancing risk increases, d) lenders' financial covenants are breached.
True Corporation Public Company Limited, formerly called TelecomAsia, is
headquartered in Bangkok, Thailand and is an integrated provider of fixed line, broadband, internet, mobile services and lately cable TV (via the UBC acquisition) in that country.
Sydney
Charles F. Macgregor
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Pty Ltd
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100
Hong Kong
Gary Lau
Senior Vice President
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121