Oct 14, 2009 (LBO) - Fitch Ratings has lifted the outlook on Sri Lanka Telecom's 'B+' foreign currency rating to 'stable' from 'negative' following the upgrade of the outlook of the sovereign rating. "Despite pressure on profitability due to intense competition and weak macroeconomic conditions in Sri Lanka, SLT's cash generation continues to be strong." The agency has also confirmed SLT's local currency rating at 'BB-' with a 'negative' outlook, the national rating at 'AAA(lka)' with a 'stable' outlook and its senior unsecured notes due in 2009 at 'B+' based on a recovery rating of 'RR4'.
Fitch said SLT's foreign currency rating continues to be constrained by Sri Lanka's foreign currency rating of 'B+'.
Although SLT is majority-owned by the Government of Sri Lanka, Fitch said the company's strong stand-alone financial profile and track record of limited cash returns to shareholders, and has taken the view that rating SLT above that of the sovereign's.
"SLT's ratings continue to reflect its established position as an integrated telecom operator with strong market shares in major operating segments," Fitch said.