Fitch affirms PLDT long term foreign currency issuer default rating

TELECOMMUNICATION giant Philippine Long Distance Telephone Company (PLDT), in a disclosure to the Philippine Stock Exchange (PSE) Monday, announced that Fitch Rating “has affirmed its long term foreign currency issuer default rating (IDR) and outstanding global bonds and senior notes at BB+’, and its National Long Term rating at ‘AAA(ph)’.”

“The rating outlook is stable. At the same time, Fitch has affirmed PLDT’s long term local currency (LC) IDR at ‘BBB’ but revised the rating outlook to negative from stable,” the company further said.
It’s local currency rating “BBB/Stable” (which exceeds the sovereign local currency rating by two notches) ignores foreign currency transfers and convertibility risk, and is more reflective of its stand-alone credit profile.

In terms of foreign currency IDR, PLDT’s remains constrained country ceiling of the Philippines, which is currently “BB+.”

It also added that its national rating of “AAA(ph)” is indicative of PLDT’s relative credit strength among Philippine companies.

Fitch’s rating action comes in the wake of the PLDT’s decision to acquire a 20 percent stake, valued at P20 billion, in the Manila Electric Company (Meralco).

The proposed transaction will be executed through PLDT’s subsidiary Pilipino Telephone (PILTEL) and is addition to a 10.17 percent stake purchased by the group’s beneficial trust fund (BTF) this February and March.

PLDT also expects the BTF’s stake to be transferred from its affiliate Metro Pacific Investment Corporation (MPIC) overtime and, also any future Meralco stake acquisition.

“On aggregate, the acquisition of an effective 30.17 percent stake in Meralco can be accommodated within PLDT’s local currency rating of ‘BBB’, with net adjusted leverage for fiscal year 2009 expected to remain below the maximum threshold of 1.0x set by the agency,” said Fitch’s Asia-Pacific telecommunication, media and technology team director Priya Gupta.

“However, the negative outlook on the local currency rating reflects limited headroom for a further increase in net leverage, and this regard, the agency maintains a cautious view with respect to Meralco’s weak financial position and potential financial support that it may require,” he further added.

PLDT is an integrated provider of fixed-line, broadband, cellular and information and communication technology (ICT) services.

As of December 31, 2008, the company has 35.2 million cellular, 1.8 million fixed-line and 1.0 million broadband subscribers and is the country’s leading telecommunications service provider.

It has a 52 percent subscriber market share for cellular telephony, 60 percent for fixed-line services and over 70 percent for broadband.
Major shareholders are First Pacific and NTT Communications/NTT DoCoMo, with effective common shareholdings of 26.3 percent and 20.9 percent as of January 2009. The remaining common shares are publicly held. Philippine News Agency

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