Mar 1, 2011

2 Indo telco outlooks revised to positive

Fitch Ratings has revised the outlook on PT Telekomunikasi Indonesia Tbk's (Telkom) long-term foreign and local currency issuer default ratings (IDRs) to positive from stable.
Fitch has also revised its outlook on PT Telekomunikasi Selular's (Telkomsel) long-term local currency IDR to positive from stable. A full rating breakdown is detailed below.
The revisions follow Fitch's recent revision of Indonesia's outlooks to positive from stable. Telkom's ratings are closely correlated with those of the sovereign.
This is because the Indonesian government holds a 52.44% majority stake in the company and exerts significant influence on key business and financial decisions.
Telkomsel's LTLC IDR is rated higher than the sovereign's LTLC IDR by two notches, reflecting a strong credit profile and Singapore Telecom's strategic shareholding and influence, which Fitch views as an important counterbalance to the Indonesian government's ownership.
The Outlook revision reflects Fitch's expectations that Telkomsel's LTLC IDR will be upgraded in the event of a sovereign rating upgrade in order to maintain the two-notch differential.

Disclosure: No position at the stock mentioned above. 

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