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Singtel and Optus’ outlook downgraded to negative: Moody’s
https://www.ig.com/sg/news-and-trad...outlook-downgraded-to-negative--moodys-190306
Singapore Telecommunications Limited (Singtel)’s ratings outlook was revised from ‘stable’ to ‘negative’ by ratings firm Moody’s Investors Service on Tuesday as a weakening operating and financial profile, and increased competition in Australia and Singapore will prove to be a challenge for the telco to have a 'meaningful improvement' in its earnings over the next 1 year to 1.5 years.
Moody's vice president and senior analyst Nidhi Dhruv said in a report that the ratings agency does not expect a meaningful improvement in Singtel's underlying earnings before interest, tax, depreciation and amortization (EBITDA) over the next 12-18 months, ‘as intense price competition in Singapore and Australia is leading to lower average revenue per user (ARPU) and profitability in both markets.’
In addition, the partial or full subscription to Singtel’s portion in its associate Bharti Airtel’s INR250 billion (US$3.5 billion) rights issue would ‘further weaken its metrics and keep net leverage above our tolerance for the rating, absent any capital restructuring initiative’, Mr Dhruv added.
The exposure in the additional equity injection to Bharti would increase Singtel’s gross leverage to around 2.3 to 2.5 times, net leverage around 2.2 to 2.4 times, and cash balances of around S$400 to S$450 million, which is not within the ratings agency’s expectations for the telco’s current A1 rating. Singtel has a 39.5% stake in Bharti.
https://www.ig.com/sg/news-and-trad...outlook-downgraded-to-negative--moodys-190306
Singapore Telecommunications Limited (Singtel)’s ratings outlook was revised from ‘stable’ to ‘negative’ by ratings firm Moody’s Investors Service on Tuesday as a weakening operating and financial profile, and increased competition in Australia and Singapore will prove to be a challenge for the telco to have a 'meaningful improvement' in its earnings over the next 1 year to 1.5 years.
Moody's vice president and senior analyst Nidhi Dhruv said in a report that the ratings agency does not expect a meaningful improvement in Singtel's underlying earnings before interest, tax, depreciation and amortization (EBITDA) over the next 12-18 months, ‘as intense price competition in Singapore and Australia is leading to lower average revenue per user (ARPU) and profitability in both markets.’
In addition, the partial or full subscription to Singtel’s portion in its associate Bharti Airtel’s INR250 billion (US$3.5 billion) rights issue would ‘further weaken its metrics and keep net leverage above our tolerance for the rating, absent any capital restructuring initiative’, Mr Dhruv added.
The exposure in the additional equity injection to Bharti would increase Singtel’s gross leverage to around 2.3 to 2.5 times, net leverage around 2.2 to 2.4 times, and cash balances of around S$400 to S$450 million, which is not within the ratings agency’s expectations for the telco’s current A1 rating. Singtel has a 39.5% stake in Bharti.
