Bangkok--4 Apr--Moody's
Moody's Investors Service has today affirmed Total Access Communication Public Company Limited's (TAC) Ba1 corporate family rating. At the same time Moody's has revised the rating outlook to stable from positive. The change in the outlook follows upon a period of increasing regulatory and political uncertainty in thailand.
"While TAC continues to demonstrate an ability to sustain a stable operating platform, including sound credit metrics in the competitive Thai market," says Moody's Charles Macgregor, VP/Senior Credit Officer, "The company, however, is exposed to moderate systematic risk and may be susceptible to changes in government policy and/or the regulatory environment."
"In addition, TAC maintains a moderate liquidity profile which may be reliant on accessing committed facilities - that have some conditionality - to meet its upcoming debt maturity obligations and capex requirement," Moody's Macgregor adds.
In accordance with Moody's global rating methodology for telecommunications companies (please refer to Rating Methodology: Global Telecommunications Industry, February 2005), TAC's overall performance measurements relative to the rating methodology indicates a high Barating category which is consistent with its Ba1 corporate family rating category.
The stable outlook reflects Moody's expectation that TAC's sound financial profile will provide sufficient flexibility within the existing rating should there be any unfavourable regulatory outcomes in the next 12 months.
TAC's rating could experience an upward trend if there is more stability within the Thai regulatory and political arenas and a) TAC continues to demonstrate an ability to execute its business plan and generate positive free cash flow on a sustainable basis; and b) sustain a sound liquidity profile. Financial metrics that may evidence this would be a ratio of debt to EBITDA in the range of 2-2.2x and a (EBITDA-Capex)/Interest ratio approaching 2x.
On the other hand downward rating pressure may become evident should TAC experience harsher-than-expected regulatory outcomes that result in lower returns from its network or indeed a negative political outcome on foreign ownership, greater competitive pressures on retail pricing, and an acceleration in its capital expenditure program, which may lead to lower EBITDA margins, possibly below 25% and failure to generate sustainable positive cash flow, such that Debt/EBITDA rises above 2.5x.
Total Access Communications Public Company Limited, headquartered in Bangkok, Thailand, is the second largest provider of cellular communications services.
Sydney
Charles F. Macgregor
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Pty Ltd
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Singapore
Alan Greene
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
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