Bangkok--12 Oct--Moody's Investors
Moody's Investors Service has a stable outlook for the telecom sector in Asia Pacific, but sees some negative pressures continuing over the next 12-18 months.
In a new report, the rating agency notes that negative rating actions since the third quarter of 2008 have outnumbered positive ones for issuers in the sector, which continues on stable outlook as one of the region's few industries to have remained relatively unscathed from the past year's global recession and financial crisis.
Moody's bases its stable outlook on various factors, ranging from strong industry fundamentals to good liquidity, which offset slowing growth in demand and revenues as well as increasing competition.
"Despite pressures, telecom margins in the region are still high and present attractive investment opportunities," says Laura Acres, the report's lead author and a Moody's vice president in Hong Kong.
She adds, "Steady cash flows have ensured that balance-sheet liquidity for most issuers ranges from adequate to excellent, as is their access to capital markets, while debt maturities remain manageable." Acres says, "Most issuers are well capitalized with relatively strong balance sheets."
A second author of the report, Ivan Palacios, a Moody's analyst in Singapore, notes, "In the current environment, stronger players are best able to ride out the economic downturn and capitalize on the weakness of competitors."
A third author, Ian Lewis, a senior analyst for Moody's in Sydney, says, "Our ratings have shown a reasonably high degree of resiliency and remain well positioned during this economic slowdown and incipient recovery."
However, he adds some cautionary points: "Weak operating performance, renewed M&A activity, an increase in business risk due to increasing regulatory uncertainty (as in Australia) or a rise in competitive pressures, as well as a change in overall financial strategies could weigh on ratings."
In Asia Pacific, Moody's rates a total of 25 telecommunications companies in the following countries: Australia, Japan, Hong Kong, Indonesia, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South Korea, and Thailand.
The report's other author is Takashi Usui, a senior analyst in Tokyo, and the report, entitled, "Asia-Pacific Telecommunications Sector: Stable outlook, but negative pressures continue", is available at www.moodys.com. Moody's uses the analysis presented in its rating methodology for the global telecommunications industry, published in December 2007. Rating methodologies are also available at www.moodys.com under the credit-policy directory and rating-methodologies subdirectory.