Fitch report reiterates negative outlook for Telecom
Rating agency sees more tough times ahead.
Rating agency Fitch has reiterated its negative outlook for Telecom in a report released today, "2011 Outlook: Asia-Pacific Telcos''.
"Most of the 25 telecom operators that Fitch rates will be able to weather any adverse conditions, and maintain or improve 2010 credit profiles given their robust liquidity and relatively low gearing. Lower capex and license fee spending in major markets suggests that aggregate free cash flow (FCF) generation should increase," said Matt Jamieson, a Fitch senior director and dead of the agency’s Asia Pacific Telecoms Media and Technology team.
"The two main exceptions are Telstra and Telecom New Zealand, where Fitch currently has negative outlooks due to high levels of regulatory risk associated with the requirement to divest their fixed-line infrastructures into new state-owned national broadband companies."
Mr Jamieson added: "Both operators are also facing intense competitive pressures,''
Fitch has previously signaled it is likely to downgrade Telecom's credit rating if structural separation goes ahead.
Elsewhere, the report canvases a familiar theme, nothing that the positive impact of higher data revenues for Asia-Pacific telecom companies could be offset by lower voice revenues, higher marketing expenses, and network capacity constraints.
Telecom shares (NZX: TEL) were up 1 cent to $2.32 in late trading.
The company has been on a bull so far in 2011, and is now well above its 12-month low of $1.78.
NBR staff
Fri, 28 Jan 2011
Fri, 28 Jan 2011
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Fitch report reiterates negative outlook for Telecom
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