S&P affirms TM's A- long-term corporate credit rating

SINGAPORE (Dec 8): Standard & Poor's Ratings Services affirmed its 'A-' long-term corporate credit rating on TELEKOM MALAYSIA BHD [] (TM), and removed it from CreditWatch. The outlook is stable.

The ratings agency said on Thursday it had removed from CreditWatch the 'axAA' ASEAN regional scale rating on the company.

“We also affirmed and removed from CreditWatch the 'A-' issue ratings on the US$500 million notes due 2014 that TM guarantees, and the US$300 million 7.785% debentures due 2025 that the company issued,” it said in a statement.

To recap, on July 28, S&P had placed TM on CreditWatch with negative implications on July 28, 2011.

"We removed the ratings from CreditWatch after assessing TM's stand-alone credit profile now as 'a-', compared to 'bbb+' previously. We expect the company to maintain its financial performance due to its solid cash flow generation capacity," said S&P's credit analyst Manuel Guerena.

"Moreover, its ‘business as usual’ capital expenditure is likely to be lower than in previous years, even if the expenditure related to its high-speed broadband (HSBB) network grows temporarily," he said.

S&P said TM's dominant position in the domestic fixed-line, data, and broadband markets translated into a strong business risk profile.

This supports the company's strong operating cash flows, which along with proceeds from noncore assets divestitures, has funded a significant portion of its capital expenditure program. A decline in TM's traditional voice fixed-line business and the company's limited cash flow diversity partly offset these strengths.