• 
• 

Published on April 12, 2008

Fitch Ratings Thailand has removed its "Rating Watch Negative" stamp on Advanced Info Service (AIS) and Total Access Communication (DTAC), which had been imposed since February last year.

Fitch said concerns over policy, legal and regulatory risks were now reduced to a level that should not have an adverse impact on both firms in terms of future investment and shareholder support.

The Council of State last May deemed the amendments of telecom concessions for cellular operators to be not in compliance with the law and ordered the establishment of a Coordinating Committee to present the facts and opinions for further consideration by the Cabinet.

However, there has been little progress on these issues over the past six months.

This was due mainly to the resignation of the information and communications technology minister, Sitthichai Pookaiyaudom, who initiated the review last September.

Moreover, the election and appointment of a new government in February further lowered the risks of concession revocation, Fitch said.

Fitch expects the newly elected government to take a softer approach on these issues, which should result in minimal impact to private operators, given its greater focus on the development and liberalisation of the industry and moving beyond the legal disputes.

AIS's ratings are based on its strong financial position and leading market position as Thailand's largest cellular operator with more than 24 million customers.

The company also benefits from a competitive cost structure as a result of its large subscriber base and relatively low regulatory-related costs.

However, the high level of expenses - including a technology upgrade to 3G broadband cellular service, intense competition and regulation uncertainties - could weaken AIS's current strong financial position, particularly if dividend pay-outs remain high, Fitch said.

DTAC's ratings reflect its strong market position, strengthening financial position and shareholder support from Telenor of Norway, the ratings firm said.

Key credit concerns include the high level of capital spending to increase coverage and upgrade technology, the intense competition as well as regulatory uncertainties in the Thai telecom industry.

DTAC has more than 18 million subscribers.

At the same time, Fitch has affirmed the ratings of AIS and DTAC.

It gave AIS a long-term foreign currency Issuer Default Rating (IDR) of "BBB+", a national long-term rating of "AA (tha)" and a national short-term rating "F1+(tha)".

AIS's outlook is considered "stable".

DTAC's long-term foreign-currency IDR is ranked "BB+", its national long-term rating "A (tha)", its national short-term rating "F1 (tha)" and its senior unsecured debentures rating "A(tha)".

DTAC's outlook is also deemed "stable".

The Nation