Fitch: No Immediate Rating Impact from AISs Weak Guidance

Stocks and Financial Services Press Releases Wednesday February 10, 2016 14:01
Bangkok--10 Feb--Fitch Ratings

Advanced Info Service Public Company Limited's (AIS) weak EBITDA margin guidance for 2016 is unlikely to have an immediate impact on the company's ratings, according to Fitch Ratings. We believe that AIS should have a sufficient cushion to support a temporary earnings drop and an increase in financial leverage. AIS's 'BBB+'/'AA+(tha)'/Stable ratings reflect its large scale, leading market position, and relatively low financial leverage even during periods of intense competition and high capex.

Fitch, however, expects operating EBITDAR to decline by 17% to around THB60bn in 2016 from THB72.4bn in 2015. The decline would be mainly a result of the potential one-off expenses relating to the shutdown of its 2G, 900MHz network, after the company failed to secure the 900MHz spectrum in December 2015's auction. AIS will need to offer handset subsidies to its 2G customers to encourage them to move to a 3G network before the 2G network is shutdown, which is likely before the end of March 2016.

AIS also plans to continue provide services for the remaining 2G customers during the transition period via a roaming service with another operator. The company estimates the total cost for handset subsidy and roaming service to be around THB8bn in 2016.

As a result, Fitch estimates that AIS's funds flow from operation (FFO)-adjusted net leverage will slightly exceed our 1.5x guideline for its 'BBB+' rating level in 2016. However, we expect this to come down to below 1.5x in 2017 due to cash flow improvements after the one-off handset subsidies and roaming costs fall away. Yet we may nevertheless take negative rating action if leverage remains above 1.5x for a protracted period, due either to the lack of anticipated earnings recovery or higher debt. At end-2015, AIS's FFO-adjusted net leverage remained low at 1.0x.

Fitch believes that AIS should have enough spectrum to provide 3G and 4G services for its large subscriber base despite the lack of low-frequency 900MHz spectrum and the 2G network shutdown. In November 2015, AIS won the bidding for 1.8GHz spectrum, allowing the company to launch its 4G service in January 2016. The potential partnership with TOT Public Company Limited (TOT, the state-owned telecom company) would also allow AIS to utilise TOT's 2.1GHz spectrum and towers to enhance its 3G service. Fitch expects that AIS will continue to maintain its leading market position, with service revenue market share of around 50% over the next two years (9M15: 52.4%).

Latest Press Release

Gossip News: Nattaphatt Tanboon-ek, New CFO of WHAUP

WHA Utilities & Power brought in a veteran - Nattaphatt Tanboon-ek as its new CFO. In addition to his vast experience in capital market, Mr. Nattaphatt is also a guru in the energy sector. Once taking the helm, he will immediately drive both the...

Photo Release: KTC joins hands with Family Mart and Lawson 108 in providing Bt. 10 cash backs.

Mr. Nattasit Soontranu, Vice President - Credit Card Business, "KTC" or Krungthai Card Public Company Limited, jointly with Family Mart and Lawson 108, provide members worthwhileness with Bt. 10 cash back E-Coupons by making transactions using KTC credit...

Dusk Network Announces Listing of DUSK Token on Bitfinex, Bittrex International and Ethfinex

- Listings on leading exchanges follow recent $8.1 million raise by Amsterdam based Dusk Network , July 15, 2019 /PRNewswire/ -- Dusk Network, a cryptographically transparent digital ledger, has announced today that its cryptocurrency, DUSK (ERC-20)...

CIMB THAI records 19.4% Y-o-Y increase in net profit to THB 429.9 million for 6M2019. CIMB Thai Fast Forward programme starts to reap results

Mr. Adisorn Sermchaiwong, Acting President and Chief Executive Officer of CIMB Thai Bank PCL, stated that according to the unaudited consolidated financial results for the six months ended 30 June 2019, CIMB Thai group recorded a consolidated net profit...

Premia Partners introduces global first MSCI Vietnam ETF and first low-cost US Treasury Floating Rate ETF designed for Asia as investors position for market uncertainties amid trade discussions

Premia Partners, a leading Hong Kong based investment firm and Top 8 ETF issuer in Hong Kong, announces listing of two market access ETFs designed as efficient building blocks to access opportunities in Vietnam and US Treasuries on July 18th. The two...

Related Topics