3G to be a boon to Thailand's telecom landscape: S&P

 

 

 

"The auction will help improve our assessment of above-average regulatory and industry risk in Thailand. It will help telecom companies grow and improve their profitability in the next three to four years. This is because they can provide higher-value 3G services; the license fee for 3G is about 6 per cent of revenues compared with the existing concession fee of about 25 per cent of revenues," the rating agency said.

The view was expressed as it announced on Friday that despite required huge investment following the auction, there would be no effect on the credit ratings of Advanced Info Service Plc  and True Move Co Ltd.

On AIS, rated "A-" with stable outlook, it viewed that the financial ratios will not deteriorate materially and its debt-to-EBITDA ratio will remain less than 1 time despite the associated investment. This is despite the spectrum cost of Bt14.6 billion, which is being higher than its expectation of Bt10 billion in May. S&P believed that AIS will spend about Bt50 billion over the next three years to roll out the 3G network, which is more than its previous expectations of about Bt45 billion.

On True Move, rated "B" with stable outlook, S&P said that the Bt13.5 billion bid by a subsidiary of its parent - True Corp - combined with an increase in capital expenditure will put pressure on True Crop's already weak credit profile. 

"Nevertheless, we expect continued support from Charoen Pokphand Group (CP Group), True Corp's 65 per cent owner, to help maintain the company's credit profile. We believe CP Group has a favourable business position and cash flows--with operations in agribusiness, food and retail and distribution--as well as good financial flexibility," it said.