Bangkok--13 Mar--Moody's Investors Services Moody's Investors Services sees a stable outlook for the telecommunications sector in Asia Pacific over the next 12-18 months. In a new report, Moody's says ongoing stability may prompt upward rating pressure for some companies that successfully manage their capital expenditures and competitive environments as well as improve their financial profiles. "However, despite the generally stable outlook, some companies face financial and operating challenges," says Laura Acres, a Vice President/Senior Analyst at Moody's Hong Kong office. "Refinancing risk and funding for capital expenditure plans, needed to maintain market growth, represent the most immediate and crucial of these challenges, but these appear manageable for most rated entities even in the current environment ," says Acres. The just-released report, authored by Acres and Ian Lewis, also a Vice President/Senior Analyst and with Moody's Sydney office, covers a wide range of areas, including the sector's rating outlook, financial fundamentals, M&A activities and the regulatory environment. According to the report, despite the credit crunch, the telecom sector's liquidity and access to debt markets remain good overall, with a few exceptions, both of which are in Thailand and Pakistan. "Credit spreads have widened from the start of the sub-prime crisis eight months ago, but Australia and New Zealand's top carriers enjoy reliable access to the markets, amid a flight to quality," adds Lewis. "Across the region, Moody's expects sustained growth in most regional cellular markets and declines from peaks in many carriers' capital-expenditure cycles, two factors that should provide improvedcash flows and thereby support Moody's ratings," says Acres. The report notes that similar support comes from stable market structures, and where most rated operators enjoy leading or top positions and a degree of control over the nature and pace of new developments. "Although competitive environments are putting pressure on profit margins, such margins for carriers in the region tend to be much higher than in other parts of the world," adds Lewis. Likewise, the risk of regulatory changes in countries, such as Thailand, Indonesia, and Korea, could weigh on ratings, but in Thailand, for example, the outcomes may not be known for several years. The report further says that competition has encouraged top carriers from mature markets to look not just to other countries in the region, but farther afield to relatively untapped markets in Africa. The report is entitled, "Industry Outlook for the Asia-Pacific Telecommunications Sector: Favorable Market Conditions Generally Support Ratings." It is available at www.moodys.com.