Hong Kong, May 02, 2013 -- Moody's Investors Service has affirmed PT MNC Sky Vision Tbk's B2 corporate
family and senior secured bond ratings.
The ratings outlook is positive.
RATINGS RATIONALE
"The ratings affirmation reflects Sky Vision's healthy operating
performance, which is in line with our expectations," says
Annalisa Di Chiara, a Moody's Vice President and Senior Analyst.
"The company reported strong subscriber growth of 48% and stable
average revenue per user (ARPU) in FY2012, which resulted in 38%
revenue growth and EBITDA margins above 40%," adds Di Chiara.
Sky Vision is the largest pay-TV provider in Indonesia, with
a market share of around 70%.
"The company is favorably positioned for continued organic growth given
Indonesia's low pay-TV market penetration rate of 6.6%
in 2012," says Di Chiara.
However, despite its solid market position, Moody's
continues to view as a potential threat, emerging competition from
other telecommunications operators.
These competitors may boost their product offerings and seize market share
by bundling voice, broadband, TV and mobile services to gain
subscribers.
Moody's believes that over the intermediate term, competition in
the pay-TV sector will exert pressure on Sky Vision's ARPU,
increase churn rates and subscriber acquisition costs.
While these factors, combined with higher expenditure on promotions
and discounts to attract new subscribers, will pressure the company's
operating margins, we expect its EBITDA margins will be maintained
at or above 40% over the next two years.
The positive outlook reflects Sky Vision's improved liquidity position
following its IPO in July 2012, as well as its ability to defend
its leading position in pay TV.
However, given the company's strong subscriber growth,
its capex requirements will continue to outweigh its internally generated
cash flow.
As a result, the company's cash balance will be gradually
depleted over the next 12 months and as such, it will need to rely
on external financing to support its growth.
Based on Moody's expectations, Sky Vision will need to secure
additional funding of IDR600 million in 2014 to support its operations.
Moody's would consider a ratings upgrade, if the company continues
to grow its market share over the next 12 months while maintaining healthy
subscriber growth and ARPUs such that its margins are sustained above
40%.
Moreover, Sky Vision must maintain a sufficient cash cushion to
support its negative free cash flow expected over the next 12 months.
Should the company secure additional funding from the capital markets
to support its growth, the ratings could be upgraded.
Downward pressure could develop should intensifying competition result
in a decline in the company's market share.
In addition, any reduction in PT Global Mediacom Tbk's shareholding
of Sky Vision -- resulting in a change in the parent company's
responsibilities and ability to support the company -- will
also have a negative impact on its ratings.
Sky Vision's ratings were assigned by evaluating factors that Moody's
considers relevant to the credit profile of the issuer, such as
the company's (i) business risk and competitive position compared with
others within the industry; (ii) capital structure and financial
risk; (iii) projected performance over the near to intermediate term;
and (iv) management's track record and tolerance for risk. Moody's
compared these attributes against other issuers both within and outside
Sky Vision's core industry and believes Sky Vision's ratings are comparable
to those of other issuers with similar credit risk.
Headquartered in Jakarta, Sky Vision is a provider of direct-to-home,
pay-TV services. The company is 66%-owned
by PT Global Mediacom Tbk, a diversified media company, which
in turn is 51%-owned by PT Bhakti Investama Tbk.
Both Global Mediacom and Bhakti Investama are publicly listed in Indonesia.
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 MNC Sky Vision's B2 corporate family rating