Tele Rate

Aug 27, 2009 (LBO) – Standard and Poor’s has lifted the outlook of Sri Lanka Telecom’s (SLT) rating to ‘stable’ from negative, shortly after the host country’s outlook on its ‘B’ sovereign rating was lifted.

“The stable outlook on SLT reflects the country risk factors,” S&P said.

“Any downward movement of the sovereign ratings could prompt a reduction in the transfer and convertibility risk assessment or deterioration in the country risk factors, which in turn could result in a downgrade on SLT.”

The rating could be pressured if it had limitation on remitting funds for debt repayment, its business risk profile deteriorates as a result of higher competition or regulatory constraints, or if is financial risk profile “materially deteriorates because of any shareholder-friendly action,” S&P said.

An improvement in the government’s rating or outlook which would improve the transfer and convertibility risk assessment for Sri Lanka, could also result in a rating upgrade.

But SLT, the country’s largest fixed access operators which also owns a mobile unit, has a long term rating of ‘B+’ a notch higher than the sovereign.

“The ratings on SLT reflect the weak economic situation in the