Tele Rating

May 22, 2009 (LBO) – Standard & Poor’s Ratings Services said it has lowered its outlook on Sri Lanka Telecom’s (SLT) rating to negative from stable while confirming its ‘B+’ corporate credit rating and long-term senior unsecured debt rating. The rating action was made in step with S&P’s lowering of Sri Lanka’s sovereign rating to negative from stable and confirmation of the island’s ‘B’ long-term foreign currency rating, ‘B+’ local currency rating and ‘B’ short-term rating.

“SLT continues to benefit from modest debt and positive free cash flow generation from its core businesses,” said Standard & Poor’s credit analyst Yasmin Wirjawan, in a statement.

“Although the outlook revision on the sovereign rating has no immediate impact on SLT’s credit profile and the company’s short-term liquidity is adequate, funding risks could increase in the near to medium term, derived from the country’s weakening external liquidity position.”

The ratings on SLT reflect the weak economic situation in the country, intensifying competition, and high capital expenditure requirements, the rating agency said.

“These weaknesses are partly offset by the company’s leading market position in the fixed-line business, growth potential and improving ma