PLDT, Globe’s credit ratings to ‘converge’ — Fitch
MANILA, Philippines — The credit profiles of Philippine telecom giants PLDT Inc. and Globe Telecom are expected to “converge” over the next 18 months, as the Ayala-led operator ramps up capital expenditure in a bid to expand data capacity and coverage, Fitch Ratings said.
Fitch assigned a “BBB-” rating to Globe, with a stable outlook. The global debt watcher, meanwhile, gave PLDT a “BBB” rating, with a stable outlook as well.
In a nine-page special report, Fitch said the margin between the credit ratings of Globe and PLDT is expected to narrow in the coming months as both companies prepare larger capex and execute strategies ahead of the arrival of the new telco player — Dito Telecommunity.
“Leverage headroom for PLDT is likely to be more limited over the next three years amid the larger capex needed for both its fixed-broadband and mobile network,” Fitch said.
“We forecast leverage – measured by FFO (funds from operations) adjusted net leverage – to increase to around 3.0x for PLDT and Globe as they ramp up capex expansion ahead of a new mobile operator, Dito Telecommunity (formerly Mislatel),” it added.
“PLDT remains in the lead with overall telecom revenue share of 53% in 2018, though this has narrowed from 57% in 2016.”
In the same report, Fitch said the new entrant is likely to have a “limited network for at least a year from now” amid the lengthy regulatory approval process for cell-site permits.
“We believe the newcomer will pursue aggressive pricing to win market share,” the credit rater said.
“However, it would need to offer more than mobile services to tap into fastgrowing home-broadband and enterprise services to generate sufficient returns,” it added. — Ian Nicolas Cigaral
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