TRIS Rating Co., Ltd. has affirmed the company rating of True Corporation PLC (TRUE) and the ratings of TRUE’s senior secured debentures at “BBB” and has also affirmed the rating of TRUE’s senior secured debentures, which are partially guaranteed by the International Finance Corporation (IFC) at “A”. And the rating outlook has been changed to “stable” from “positive”. The ratings reflect TRUE’s strong market position as the leading integrated telecommunications company in Thailand, the growing prospects for its data communications and mobile phone businesses, and its competent management team. These strengths are partially offset by the company’s remaining weak financial position, which is the result of high leverage, fierce competition in cellular and data communication services, and the remaining uncertainty surrounding the telecommunications regulatory framework.
The “stable” outlook reflects the expectation that TRUE’s cash generating ability will not substantially weaken amid the competitive pressures. The outlook is also based on the expectation that TRUE will complete the syndicated loan refinancing plan within June 2007. However, delays in the refinancing or weaker cash generation will negatively impact the company’s ratings. TRIS Rating will closely monitor the progress of the refinancing program and will update TRUE’s ratings accordingly.
TRIS Rating reported that the TRUE Group is Thailand’s leading integrated telecommunications operator. The three main businesses of TRUE are wireline (or TrueOnline), wireless (or True Move) and pay TV (or TrueVisions), which contribute 40%, 44% and 16% to the group revenues, respectively. The company’s leadership is evidenced by its position as the fixed-line market leader in the Bangkok Metropolitan Area (BMA) and as the consumer broadband market leader, with market shares of around 55% and over 80%, respectively. Moreover, TRUE is also the largest pay TV operator, and with a subscriber market share of 19%, TRUE is ranked as the third largest mobile phone operator in Thailand. TRUE operates its wireless business via True Move Co., Ltd. (TRUE MOVE), while the pay TV business is run by True Visions PLC, (formerly known as United Broadcasting Corporation PLC -- UBC), which was acquired by TRUE at the end of 2005.
The telecommunications business is considered very competitive, particularly in the mobile phone sector. There is intense competition, which can be seen from the numerous price cutting campaigns and attractive promotional packages offered by mobile operators. This intense competition pressures the revenues and margins of all operators. TRUE’s fixed line business is trending downward like in other countries due to substitution by mobile phones. However, the growing prospects for data communications services should partly mitigate any decline in fixed line revenue.
In 2006, TRUE’s operating margin has deteriorated as a result of greater contribution from lower margin at 92% as of December 2006. Although total revenues increased around 17% mainly because of full consolidation of True Visions, TRUE’s funds from operations (FFO) in 2006 was Bt12,262 million which almost the same level as in 2005. The FFO to net debt ratio in 2006 slightly declined to 15% compared with around 16% in 2005, because net debt rose in 2006.
TRIS Rating said, while the credit ratings of the TRUE07OA, TRUE087A and TRUE117A issues are based solely on TRUE’s creditworthiness, the credit rating of the TRUE112A issue is enhanced by a partial guarantee (50% of principal) provided by the IFC, which is a member of the World Bank Group that is rated “AAA” by Standard & Poor’s and “Aaa” by Moody’s Investors Service. — End
True Corporation PLC (TRUE)
Company Rating: Affirmed at BBB
Issue Ratings:
TRUE112A: Bt6,750 million senior secured partially guaranteed debentures due 2011 Affirmed at A
TRUE07OA: Bt3,319 million senior secured debentures due 2007 Affirmed at BBB
TRUE087A: Bt11,715.40 million senior secured debentures due 2008 Affirmed at BBB
TRUE117A: Bt2,413 million senior secured debentures due 2011 Affirmed at BBB
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook reflects the expectation that TRUE’s cash generating ability will not substantially weaken amid the competitive pressures. The outlook is also based on the expectation that TRUE will complete the syndicated loan refinancing plan within June 2007. However, delays in the refinancing or weaker cash generation will negatively impact the company’s ratings. TRIS Rating will closely monitor the progress of the refinancing program and will update TRUE’s ratings accordingly.
TRIS Rating reported that the TRUE Group is Thailand’s leading integrated telecommunications operator. The three main businesses of TRUE are wireline (or TrueOnline), wireless (or True Move) and pay TV (or TrueVisions), which contribute 40%, 44% and 16% to the group revenues, respectively. The company’s leadership is evidenced by its position as the fixed-line market leader in the Bangkok Metropolitan Area (BMA) and as the consumer broadband market leader, with market shares of around 55% and over 80%, respectively. Moreover, TRUE is also the largest pay TV operator, and with a subscriber market share of 19%, TRUE is ranked as the third largest mobile phone operator in Thailand. TRUE operates its wireless business via True Move Co., Ltd. (TRUE MOVE), while the pay TV business is run by True Visions PLC, (formerly known as United Broadcasting Corporation PLC -- UBC), which was acquired by TRUE at the end of 2005.
The telecommunications business is considered very competitive, particularly in the mobile phone sector. There is intense competition, which can be seen from the numerous price cutting campaigns and attractive promotional packages offered by mobile operators. This intense competition pressures the revenues and margins of all operators. TRUE’s fixed line business is trending downward like in other countries due to substitution by mobile phones. However, the growing prospects for data communications services should partly mitigate any decline in fixed line revenue.
In 2006, TRUE’s operating margin has deteriorated as a result of greater contribution from lower margin at 92% as of December 2006. Although total revenues increased around 17% mainly because of full consolidation of True Visions, TRUE’s funds from operations (FFO) in 2006 was Bt12,262 million which almost the same level as in 2005. The FFO to net debt ratio in 2006 slightly declined to 15% compared with around 16% in 2005, because net debt rose in 2006.
TRIS Rating said, while the credit ratings of the TRUE07OA, TRUE087A and TRUE117A issues are based solely on TRUE’s creditworthiness, the credit rating of the TRUE112A issue is enhanced by a partial guarantee (50% of principal) provided by the IFC, which is a member of the World Bank Group that is rated “AAA” by Standard & Poor’s and “Aaa” by Moody’s Investors Service. — End
True Corporation PLC (TRUE)
Company Rating: Affirmed at BBB
Issue Ratings:
TRUE112A: Bt6,750 million senior secured partially guaranteed debentures due 2011 Affirmed at A
TRUE07OA: Bt3,319 million senior secured debentures due 2007 Affirmed at BBB
TRUE087A: Bt11,715.40 million senior secured debentures due 2008 Affirmed at BBB
TRUE117A: Bt2,413 million senior secured debentures due 2011 Affirmed at BBB
Rating Outlook: Stable
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Copyright 2007, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.