Downunder telcos avoid global ratings fall

New Zealand and Australian telecommunications companies have avoided the sector's global deterioration in credit, ratings agency Standard & Poor's said yesterday.

The Australasian telecommunications industry was steady, said S&P, with 75 per cent of rated companies on a stable outlook.

That was despite the recent deterioration in the credit quality of many telecommunications companies around the globe. Investors should not view them all as having the same business risks or as facing similar credit pressures, S&P's corporate and infrastructure associate Andrew Lally said.

While markets were becoming increasingly integrated, investors needed to be aware that differing barriers to entry, political and regulatory policies, cultural preferences and company strategies meant global credit trends varied.

"In general, Asia-Pacific operators have not experienced the same competitive pressure as European operators, resulting in less ratings volatility," Lally said.

The average rating for Asia-Pacific operators was BBB+, compared with BBB- in Europe.

Telecom New Zealand is rated single A long-term by S&P with a stable outlook. The company said in November that it expected to shave $1 billion off its debt of $5.4 billion by 2006.

Telstra is rated AA minus, SingTel Optus A plus and Telecom's Australia subsidiary is rated A, all with a stable outlook.

Australian and New Zealand operators generate operating income-to-sales of 45 to 55 per cent, compared with European operators' 30 to 40 per cent.

- NZPA