RPT-Fitch Publishes Thailand's AWN 'AA(tha)' Rating; Outlook Positive
(Repeat for additional subscribers)
Sept 6 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings (Thailand) Limited has published Thailand-based Advanced Wireless Network Company Limited (AWN) National Long-Term rating of 'AA(tha)' with a Positive Outlook and National Short-Term rating of 'F1+(tha)'.
Key Rating Drivers
Ratings equalised with AIS: The ratings are equalised with its parent, Advanced Info Serviced Public Company Limited (AIS; rated AA(tha)/Positive/F1+(tha)), to reflect strong links between AWN and AIS, as per Fitch's parent and subsidiary rating linkage criteria.
AIS-AWN links strong: AIS wholly owns AWN and has full management and operational control of AWN. As the owner of the 3G licence, AWN is of strategic importance to AIS. It is being used as a vehicle to migrate AIS's business and subscribers under the 2G concession scheme - which is exposed to legal and regulatory uncertainty - to the more transparent 3G licence system. AIS has provided substantial support to AWN, including personnel, operations and assistance in network development, which helps mitigate execution risk of AWN's 3G network and service rollout.
Major contribution expected from AWN: Fitch expects AWN to be a major revenue and EBITDA contributor for AIS, at over 70% and 90% respectively after 2015. In the long run, AWN will become the principal constituent of AIS's business when the majority of subscribers have migrated to the new 3G network.
Weaker standalone credit profile: Fitch believes that AWN's standalone credit profile will remain weaker than that of AIS in the medium term. A key constraint is AWN's higher financial leverage. While AWN's financial leverage will continue to improve over the next three years, its funds flow from operations (FFO)-adjusted net leverage ratio is likely to remain around 2.5x-3.0x in the long run, in comparison to AIS's consolidated leverage of below 1.5x. In addition, slower than-expected subscriber migration to the new 3G network could lead to lower revenue and profitability, and slower-than expected deleveraging.
Positive: Future developments that may, individually or collectively, lead to positive rating action include:
-An upgrade of AIS's ratings is likely to lead to an upgrade in AWN's ratings
Negative: Future developments that may, individually or collectively, lead to negative rating action include:
-A downgrade of AIS's ratings
-Weaker links between AIS and AWN, including a reduction of AIS's stake in AWN