Hong Kong, May 02, 2013 -- Moody's Investors Service has affirmed PT Media Nusantara Citra Tbk's
(MNC) Ba3 corporate family rating.
The rating outlook is stable.
RATINGS RATIONALE
"The affirmation is driven by MNC's solid operating and financial performance,
as evidenced by the company's low leverage of 0.4x and its strong
cash flow generation," says Annalisa Di Chiara, a Moody's
Vice President and Senior Analyst.
"We believe that Indonesia's robust economic growth, increased domestic
consumption and rising advertising spend provide momentum for MNC's performance
over the intermediate period. In addition, the company's
leading position in the growing free-to-air market,
strong content line-up and operating leverage should provide sustainable
earnings and cash flow generation," adds Di Chiara, who is
also lead analyst for MNC.
The rating is also supported by the company's strong liquidity position.
As of 31 December 2012, the company had IDR2.8 billion in
cash and short-term investments versus short-term debt of
IDR448million.
Although Moody's notes that MNC's dividend payout is likely to be
in the 50% range, the company is well able to do so,
given its low debt, modest capex and solid cash flow profile.
The stable outlook reflects Moody's expectation that the company will
maintain its competitive position in Indonesia's free-to-air
(FTA) television market and keep its EBITDA margins above 30%.
Upward rating pressure could arise, if the company achieves a sustained
level of cash flow generation and earnings performance and its EBITDA
margins are in the 35%-40% range.
Moody's expects MNC to retain its leading position in the free-to-air
(FTA) space in Indonesia.
On the other hand, downward rating pressure could emerge if:
(1) there is a material downturn in advertising spend; (2) the company
loses its dominant position in the Indonesian FTA television market;
(3) laws and regulations change, such that its business is adversely
impacted; and (4) the company embarks on aggressive debt-funded
acquisitions.
The key credit metrics that Moody's would consider for a downgrade include
adjusted debt/EBITDA above 2.5x-3.0x, EBITDA/interest
coverage below 3.5x-4.0x, and negative free
cash flow over the cycle.
Evidence of cash leakage to its parent -- through aggressive
dividend payouts and other forms of inter-group transactions --
could also be negative for the rating.
The principal methodology used in this rating was the Global Broadcast
and Advertising Related Industries Methodology published in May 2012.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.
PT Media Nusantara Citra Tbk, headquartered in Jakarta, Indonesia,
is an integrated media company with television, radio, print
media, content production and distribution, and wireless value-added
services operations. It is the market leader in Indonesia's FTA
TV industry, owning three of 11 FTA TV networks nationwide.
PT Global Mediacom Tbk owns approximately 64.84% of MNC,
while MediaCorp, as a strategic investor, owns another 6.85%.
Saban Capital owns 5%.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
Annalisa Di Chiara
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Philipp L. Lotter
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Moody's affirms PT Media Nusantara Citra 's Ba3 rating