Bangkok--24 Apr--TRIS Rating TRIS Rating Co., Ltd. has affirmed the company rating of True Corporation PLC (TRUE) and the ratings of TRUE’s senior secured debentures (TRUE097A, TRUE107A, TRUE117A and TRUE127A ) at “BBB” and has also affirmed the rating of TRUE’s senior secured debentures (TRUE112A), which is partially guaranteed by the International Finance Corporation (IFC), at “A”. The rating outlook remains “stable”. The ratings reflect TRUE’s market position as the leading integrated telecommunications company in Thailand, growing prospects for its data communications and mobile phone businesses, and its competent management team. These strengths are constrained by the company’s weak financial profile, which is the result of high leverage, fierce competition in cellular and data communication services, and continuing uncertainty surrounding the telecommunications regulatory framework. The “stable” outlook reflects the expectation that TRUE will sustain its strong market position in the telecom business and strengthen its competitive advantage by bundling products and services to meet customer demand. TRUE’s credit ratings should be under pressure if the company’s financial performance deteriorates and its ability to generate cash weakens amid the current competitive atmosphere. The ratings could be negatively affected if the company decides to make major investments that require substantial amounts of debt financing. TRIS Rating reported that TRUE is Thailand’s leading integrated telecommunications service provider. Their three main businesses are TrueOnline, True Move and TrueVisions, which in 2007 contributed 33%, 53% and 14% of total revenues, respectively. The company’s strong position is evidenced by its position as the fixed-line market leader in the Bangkok Metropolitan Area (BMA) and as the consumer broadband market leader, with market shares of around 50% and over 80%, respectively. TRUE is also the largest pay TV operator with a subscriber market share of 23%, operated under TrueVisions PLC, and is the third largest mobile phone operator in Thailand. TRIS Rating said that the telecommunications business is very competitive, particularly in the mobile phone sector. Competition is heightened by the numerous price cutting campaigns and attractive promotional packages offered by mobile operators. This intense competition pressures the revenues and margins of the entire industry. TRUE’s fixed line business is trending downward like in other countries due to mobile phone substitution. However, bright prospects for data communications services should partly mitigate any decline in fixed line revenue. TRUE began to record the interconnection charge (IC) revenue and cost and removed the access charge (AC) portion for its mobile phone business in November 2006. Under the IC recognition approach, TRUE’s revenues in 2007 have increased. However, operating margin has deteriorated slightly as a result of weaker margins for TrueOnline and higher expenses for TrueVisions. TRUE’s total debt declined from Bt89,722 million at the end of 2006 to Bt83,237 million at the end of 2007, but TRUE’s net debt-to-capitalization ratio remained very high at 87% as of December 2007. The funds from operations (FFO) to net debt ratio improved slightly from 15% in 2006 to 17% in 2007, as FFO rose and total amount of debt fell. Success in refinancing the Thai baht loans plus the issuance of new debentures and US dollar notes could help mitigate the company’s default risk in the near term. However, the company will continue to face refinancing risk as internal cash generation will not be sufficient to repay debts and fund capital expenditure requirements. TRIS Rating said, while the credit ratings of the TRUE097A, TRUE107A, TRUE117A and TRUE127A issues are based solely on TRUE’s creditworthiness, the credit rating of the TRUE112A issue is enhanced by a partial guarantee (50% of principal) provided by the IFC. IFC is a member of the World Bank Group and is rated “AAA” by Standard & Poor’s and “Aaa” by Moody’s Investors Service.