Sep 16, 2011

Moody's revises Indosat ratings outlook

Moody's Investors Service has revised to stable from negative the outlook on PT Indosat Tbk's Ba1 corporate family ratings and senior unsecured ratings.
"The revision in outlook primarily reflects Indosat's improved financial and liquidity positions, its improving headroom under its covenants which we believe to be sustainable, and our expectations for prudent liquidity management moving forward," said a press statement today.
The improvement in Indosat's leverage metrics in FY2010 and LTM June 2011 was partly driven by lower capex spending of Rp6.5 trillion as compared to over Rp10 trillion for the previous 2 years.
"With its increased focus on enhancing content for its data segment, as against more capital-intensive network expansion, we expect near-term capex spending to range between Rp6.5 trillion- Rp7.5 trillion per year."
Such reduced capex also reflects the increased emphasis on tower and infrastructure sharing through collocations.
"Furthermore, we also draw comfort from Indosat's demonstrated ability to secure financing in both rupiah and US$, despite ongoing volatility in the credit markets, thereby helping to substantially reduce refinancing risk and extend its debt maturity profile through prepayment of Rp6.7 trillion of its debt in 2010."
Indosat's rating combines an assessment of its fundamental strength, which at Ba2 reflects its established network and market position as Indonesia's second largest cellular operator in terms of revenue and subscribers, expectations of moderate growth in the cellular market, and its improving financial profile.
Disclosure: No position at the stock mentioned above.
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