041207: Major telcos face upgrade?

By Lennie Lectura

Reporter

MOODY’S Investors Service on Wednesday said it has placed the local currency ratings for the country’s two major telephone firms on review for possible upgrade—the Baa3 local currency corporate family rating of PLDT and Globe Telecom’s Baa2 local currency rating. At the same time, PLDT’s Ba2 foreign currency bond rating was affirmed with a stable outlook as well as Globe’s Ba2 foreign currency bond rating, also with a stable outlook. Both are above the Philippines’ foreign currency country ceiling of Ba3/stable. “The review has been prompted by a continued improvement in [their] financial profiles and the consolidation of strong operating performance,” said Laura Acres, a Moody’s vice president. The review will focus on growth prospects at the consolidated level—PLDT’s ongoing capex requirements for maintenance and rollout of next generation technologies, its financial policies over the next two years especially with regard to leverage and uses of cash, and its liquidity risk profile. Moody’s affirmation of PLDT’s foreign currency bond rating reflects the fact the rating is unlikely to rise without either an improvement in the Philippine foreign currency country ceiling or a significant improvement in PLDT's local currency rating. Acres said Moody’s review of Globe Telecom “has been prompted by Globe’s continuing strong operating and financial fundamentals.” Globe is the second largest wireless phone company with a 39-percent cellular revenue market share.

 

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