Bangkok--15 Jan--Fitch Ratings
Fitch Ratings (Thailand) has affirmed the ratings of Advanced Info Service Plc (“AIS”) and Total Access Communication (“DTAC”) following the proposed amendments to the Thailand’s Foreign Business Act (“FBA”). The ratings are affirmed as follows: AIS’ National Long-term rating at ‘AA(tha)’ with a Stable Outlook and National Short-term rating at ‘F1+(tha)’, while DTAC’s Long-term foreign currency Issuer Default rating (“IDR”) at ‘BB+’, National Long-term rating at ‘A(tha)’, National Short-term rating at ‘F1(tha)’, and its National senior unsecured rating at ‘A(tha)’. The Outlook on DTAC’s ratings is Stable.
On 9 January 2007, the Thai cabinet endorsed proposed amendments to the FBA, which limit foreign investors’ shareholding and voting rights in Thai companies to less than 50%. This planned law is still subject to legislative approval. Fitch views that the proposed changes to the FBA should have limited credit impact on AIS and DTAC, although it may result in partial dilution of the stakes of both companies’ ultimate major shareholders, namely Singapore’s Temasek Holdings and Telenor of Norway.
The agency notes that in the case of AIS, with its current strong financial position and dominant market position, a partial divestment of Temasek Holdings would have minimal impact on AIS’s credit profile. The amended FBA may lead to a reduction in Telenor’s economic interest in DTAC from the current 69%. However, the agency notes that Telenor has indicated that it would continue to maintain strong operational involvement and support of the company, which would help to support DTAC’s credit profile. However, a significant reduction of Telenor’s stake to below 49%, resulting in a loss of control of DTAC’s management and strategic functions, could negatively affect the ratings.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
Contacts: Obboon Thirachit, Wasant Polcharoen, Vincent Milton; Bangkok, Tel: +662 655 4755
Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com . Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.