TEXT-S&P: AIS rating unaffected by 3G spectrum bid
(The following statement was released by the rating agency)
Oct 19 - Standard & Poor's Ratings Services said today that its rating on Advanced Info Service Public Co. Ltd. (AIS; A-/Stable/--; axAA/--) is not affected by the company's bid for 15 megahertz of 3G spectrum, and the associated capital expenditure. We believe AIS' financial ratios will not deteriorate materially and its debt-to-EBITDA ratio will remain less than 1x. This is despite the spectrum cost of Thai baht (THB) 14.6 billion being higher than our May 2012 expectations of THB10 billion, and the higher capital expenditure. We believe AIS will spend about THB50 billion over the next three years to roll out the 3G network, more than our previous expectations of about THB45 billion.
We believe the spectrum auction is a positive development for Thailand's telecom industry. The auction will help improve our assessment of above-average regulatory and industry risk in Thailand. It will help telecom companies grow and improve their profitability in the next three to four years. This is because they can provide higher-value 3G services; the license fee for 3G is about 6% of revenues compared with the existing concession fee of about 25% of revenues.
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