TEXT-Fitch: tough times ahead for weaker Australian telcos

Wed Nov 14, 2012 4:05pm EST

Nov 14 - Link to Fitch Ratings' Report: 2013 Outlook: Australian
TelecommunicationsNov 14 - The outlook for Australia's leading telecommunications companies
(telcos) is stable in 2013 as they will consolidate their already strong market
position, Fitch Ratings says. The agency also discusses the operators' key
challenges and capex peak in 2013 in its new report "2013 Outlook: Australian
Telecommunications - Top Two Strengthen Position".   

Australian telcos face major spectrum acquisition and renewal costs in 2013. 
They are also subject to the risks of adverse trends in average revenue per 
mobile user and fixed-voice revenue. Telstra Corporation Limited 
(Telstra, 'A'/Stable) and SingTel Optus Pty Limited (Optus, 'A'/Stable) have
countered these risks by gaining mobile market share through 4G mobile services
and making changes to subscription plans. 

These two leading telcos are able to take advantage of the weak financial 
profiles of competitors to widen the gap in market share - especially in the 
mobile data and voice segments. The credit risk of Telstra significantly 
increasing shareholder returns has receded following the announcement of a 
credit-neutral capital management strategy. These developments underlie the 
stable outlook of the leading telecom operators.

Telstra and Optus will also benefit from cash flows from the National Broadband 
Network Company (NBN Co). For Telstra these infrastructure revenues will 
accelerate in 2013 as the NBN roll-out gathers momentum.
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