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Jan 28 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned a rating of bonds to be issued by PT Professional Telekomunikasi Indonesia (Protelindo) with an amount up to IDR1trilyun Rating National ‘AA-(idn)'.
Protelindo which owns and operates communication towers will use The proceeds from the issuance to repay bank loans denominated in Rupiah. The bonds are rated at the same level with the National Rating Long Term Protelindo AA-(idn) because it is a direct obligation, without conditions, and the company’s senior unsecured. Bonds to be issued will rank equally with all of the debt without assurance of the company.
National ranking in the category of ‘AA’ shows the expectation of the risk to fail very low pay relative to other issuers or securities in Indonesia. Credit risk is only slightly different from issuers or debt securities that are rated the highest in Indonesia.
Stable Cash Flow: rating reflects the business model Protelindo solid with steady cash flow and predictable obtained of long-term contracts that can not be undone (10-12 years). on the end of September 2013, the company posted revenue already contracted by IDR28.8trilyun. Ratings also reflect strong EBITDA margin of company amounted to 82.6% in 3Q13 and easy access to the funding of local and foreign banks.
Can Leverage Managed level: At the end of September 2013, funds flow from operations (FFO)-adjusted net leverage of Protelindo remain at the level of corresponding to its rank in 3.5x (2012: 4.2x). This is because commitment of the management to maintain the net debt / annualized quarterly EBITDA in level of about 3.0x-3.5x and the company’s ability to maintain margins high by increasing the amount of co-locators on the tower owned. Total Tower Continues Growth: Although Fitch does not expect the ratio debt of Protelindo will rise above 4.0x on an ongoing basis, Fitch also not predict that the debt ratio will fall below 3.0x. it is because the company will continue to increase the number of its towers as part of the growth strategy. The company has 9,379 towers in 3Q13, up from 8,460 at the end of 2012. In the projections, Fitch assumes funding for acquisition by IDR1 trilyun.
Risks From Tenants: Risk ranking is the main Protelindo exposure to the Indonesian telecommunications operators that are small and do not generating profits as PT Bakrie Telecom (C) and PT Smartfren Telecom Tbk (CC (idn)). Viewed as a whole, the two CDMA operators who have difficulty contribute to 15% of the revenue in 3Q13 Protelindo. based analysis of Fitch, failure to pay the operators of the two can lead to rising levels of leverage above 4.0x, the minimum threshold at which the action negative ranking will be considered, if it occurs on an ongoing basis.
Aside from that, Protelindo also gained 36% of their income in late September 2013 from PT Hutchison 3 Indonesia (3 Hutchison Indonesia), a subsidiary of Hutchison Whampoa Limited (HWL, A-/Stabil) and GSM operators who compete aggressively in the data segment. However, the overall risk of the tenant can Fitch menurutpendapat reduced because operators generally considers tower lease obligations as senior debt because they need to continue to provide service to customers.
Ranking of positive action is not expected in the short term because company likely will not lower its level of debt ratio significantly because of the investment needed to maintain growth. Negatives: The development in the future, both individually and collectively can downgrade include:
- The weakening of the commitment of HWL 3 Hutchison Indonesia, which causes 3 Hutchison Indonesia did not meet contract commitments to Protelindo
- Tower portfolio acquisitions funded by debt and non-payment rent by telecommunications operators which cause weakening weaker FFO-adjusted net leverage above 4.0x on an ongoing basis.