S&P revises Sri Lanka Telecom outlook to negative

From left: Dr. Fernando Im, Senior Country Economist for Sri Lanka and the Maldives, The World Bank, Hon. Eran Wickramaratne, State Minister, Ministry of Finance and Mass Media, Dr. W A Wijewardana, Former Deputy Governor of the Central Bank of Sri Lanka, Prof. Indralal de Silva, Former (Chair) of Demography, University of Colombo, Prof. Amala de Silva, Department of Economics, University of Colombo at the panel discussion on "Demographic Change in Sri Lanka" moderated by Dr. Ramani Gunatilaka, International Centre for Ethnic Studies.

International rating agency Standard & Poor’s Ratings Services on Tue. revised Sri Lanka Telecom’s rating outlook to negative from stable. International rating agency Standard & Poor’s Ratings Services on Tue. revised Sri Lanka Telecom’s rating outlook to negative from stable. SLT has a B+ rating for its foreign currency debt and a BB- rating for its local debt from S&P.

During its US$ 100 mn bond issue, SLT also picked up a B+ rating with stable outlook from Fitch Ratings International. Fitch has not indicated a change in its rating outlook.

“The outlook revision reflects the possibility of weakening in SLT’s credit profile due to the devastating tidal waves that hit Sri Lanka and other Asian countries on Dec. 26, 2004,” S&P said in a statement.

The tidal waves damaged SLT’s telecommunications network and disrupted its operations.

Furthermore, the natural disaster has intensified short-term pressures on the country’s balance-of-payments position and the government’s budgetary profile. It also poses challenges to fiscal consolidation and public debt reduction.

“The ratings could be lowered if the damage caused by tidal waves substantially hurts SLT’s business or financial profiles. The ratings might also be lowered if the sovereign’s public debt burden and external liquidity position are materially worsened,” said Standard & Poor’s credit analyst Sharad Jain, director in the Corporate & Infrastructure Ratings Group.

SLT is the incumbent telecommunications player and the only integrated service provider in Sri Lanka.

In 2003, SLT had revenues of Rs. 25.6 bn (US$ 265 mn), and net income of Rs. 2.2 bn.

Domestic fixed-line business and international long distance business accounted for about 63 percent and 30 percent of the group’s revenues, respectively. At June 30, 2004, SLT had 837,000 fixed-line customers and 230,000 mobile subscribers.

Sri Lanka’s government said on Tuesday more than 18,700 people are confirmed dead two days after a tsunami battered the island and officials fear the toll will hit 25,000.

“At the moment they have recovered 18,706 bodies,” said D.N. Wanigasooriya, social services officer attached to the state-run National Disaster Management Center told Reuters.

The tsunami was triggered by an earthquake in the Indian Ocean Sunday, which sent waves up to 15-feet high crashing onto Sri Lanka’s eastern and southern shores, flooding towns and villages and sweeping people and cars away.

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