The telecommunications sector in Asia Pacific is set to remain relatively stable over the next 12-18 months, according to new analysis released by ratings agency Moody's.
Market conditions could even result in some companies improving their ratings, if they can demonstrate successful capital expenditure management, reports the agency. In particular, countries likely to see continued expansion are Indonesia, China and Pakistan, with no likelihood of a slow-down in the short term.
The global liquidity crisis has only had minimal effect on the industry, with companies mainly continuing to capitalise on investments made in previous years to expand their networks.
However, the key challenges will be with those companies needing to refinance transactions or source funding for capital expenditure plans. However, Moody's deems all these financing needs as 'manageable '.
The agency suggests that with the cross-border bond financing market virtually closed and depressed equity markets, companies looking for refinancing are turning to debt markets or domestic banks.
There are also predictions of future consolidation in the sector driven by increased competition; this is particularly likely in highly developed markets such as South Korea and Singapore.
On the negative side, regulatory uncertainty has emerging in some countries, which could result in changes in ratings. Thailand is highlighted as an example due to disputes between various regulatory bodies.
Cellular sector growth is said to remain "solid "and the financial profiles of firms are improving due to the increased flow of cash which is being directed towards debt repayment.
Indonesia is highlighted as one the key areas for growth, with cellular penetration, now standing at 40%, due to rise to 50% in 2010.
Reader Comments