S&P cuts Sri Lanka Telecom’s credit outlook

Apr. 27 (LBO) – US credit ratings agency Standard & Poor’s Thursday cut Sri Lanka Telecom’s credit outlook to negative from stable, in the wake of escalating violence, which may result in the country slipping back to war. The cash rich operator posted net profits of 3,093 million rupees, while revenues surged 10 percent to 32,515 million rupees for the year ended 2005.

The Sri Lankan air force has launched a series of strikes aimed at Tamil Tiger positions in the northeast since the Tigers were blamed for a suicide bombing on Tuesday in Colombo targeting the head of the army.

Reports from northeast Sri Lanka say at least 18 civilians have been killed in the latest unrest. At the sametime, the New York based rating agency affirmed its ‘B+’ foreign currency and ‘BB-‘ local currency corporate credit ratings on SLT.

The rating action follows S&P’s decision today to cut Sri Lanka’s credit outlook to negative from stable due to the escalating civil unrest in the country.

“The outlook revision on the sovereign rating came in the wake of escalating violence that threatens a return to full-scale hostilities,” S&P statement said.

Sri Lanka Telecom, controls 86 percent of the country’s fixed-line market and a 15 percent of the cellular market.

Japans Nippon Telegraph & Telephone Corp. or NTT controls 35.2 percent of SLT, the Sri Lankan government owns 49.5 percent and the public 15.3 percent.