Moody's Investors Service has downgraded to B3 from B2 the corporate family rating of True Corp, and the corporate family and senior unsecured bond ratings of its consolidated subsidiary, True Move.
Moody's has also placed all ratings under review for further downgrade.
"The rating action reflects the prolonged character of True Corp's negative free cash flows (FCF), due to weak earnings from the mobile business and a high level of capital expenditures (capex). As a result, we expect its financial and liquidity profiles to remain under pressure in the coming 12-18 months," says Yoshio Takahashi, a Moody's Assistant Vice President.
True Corp's negative FCF rose to THB21 billion for the 12-month period ended September 2013 from about THB6 billion in 2011 and below Moody's expectation. Moody's estimates that its negative FCF will likely remain at a similar level in 2014, given large capital requirements for 3G and the potential for additional spectrum fee payments following the 1.8 GHz spectrum auction in 2014.
At the same time, True Corp's reported consolidated EBITDA margin is likely to stay weak. Its reported consolidated EBITDA margin in Q3 2013 further declined to 17.6% in Q3 2013 from 19.8% in Q1 2013 and 18.8% in Q2 2013.
While a reduction in revenue-sharing costs for expanding 3G revenue may help slightly improve its margins, Moody's expects its reported consolidated EBITDA margin will stay at around or below 20%, due to rapid declines in earnings from 2G services, as well as intensified competition in 3G services.
No comments:
Post a Comment