New York, August 10, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 3 August 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
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This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for the rated entities listed below was Telecommunications Service Providers published in January 2017. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Telecommunications Service Providers
Scale: Scale is considered as it influences many of the core attributes that drive resiliency to stress. These attributes may include, among other aspects, the breadth of a company's customer base, the depth of its business, economies of scale, operational and financial flexibility, and greater pricing power. Scale can influence ability to harness business trends, support a stable or growing market position and withstand competitive pressures. For service providers in the telecommunication industry, scale can influence a company's ability to bundle products, and its ability to absorb a temporary disruption, acquisition, or misjudgment in the execution of capital investments. Scale is measured by total reported revenue.
Business Profile: Business profile can influence a company's ability to generate operating cash flows and the stability and sustainability of those flows. Core aspects of a business profile that drive success or failure typically include the depth and breadth of the company's product offering, its competitive environment, and the position it occupies in its operating markets. Some considerations include business model, competitive environment, technical positioning, regulatory environment, and market share.
Profitability and Efficiency: Profits are considered because they are necessary to maintain a business' competitive position, including sufficient reinvestment in marketing, research, facilities, and human capital. We consider the level and trajectory of operating margins and revenue together with their sustainability.
Leverage and Coverage: Leverage and coverage measures are considered as indicators for a company's financial flexibility and long-term viability. Financial flexibility is critical to respond to changing consumer preferences, regulatory changes, competitive challenges, and unexpected events. Key metrics include Debt/ EBITDA, Retained Cash Flow/ Debt and EBITDA minus Capital Expenditure/ Interest Expense.
Financial Policy: Management and board tolerance for financial risk is a consideration because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Considerations include a company's public policy commitments, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Considerations: Some other considerations include but are not limited to: our assessment of the quality of management, corporate governance, financial controls, liquidity, non-wholly owned subsidiaries, excess cash balances, event risk, and parental and institutional support.
• Axiata Group Berhad
• Bharti Airtel Ltd.
• CAS Holding No. 1 Limited
• China Mobile Limited
• CK Hutchison Group Telecom Holdings Limited
• Hong Kong Telecommunications (HKT) Limited
• Indosat Tbk. (P.T.)
• KT Corporation
• PLDT Inc.
• Singapore Telecommunications Limited
• Singtel Optus Pty Limited
• SK Telecom Co., Ltd.
• Telekom Malaysia Berhad
• Telekomunikasi Indonesia (P.T.)
• Telekomunikasi Selular (P.T.)
• Telstra Corporation Limited
• Voyage Digital (NZ) Limited
• XL Axiata Tbk (P.T.)
The principal methodology used for the rated entities listed below was Telecommunications Service Providers (Japanese) published in April 2017. Please see the Rating Methodologies page on https://ratings.moodys.com/japan/ratings-news for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Telecommunications Service Providers (Japanese)
Scale: Scale is considered as it influences many of the core attributes that drive resiliency to stress. These attributes may include, among other aspects, the breadth of a company's customer base, the depth of its business, economies of scale, operational and financial flexibility, and greater pricing power. Scale can influence ability to harness business trends, support a stable or growing market position and withstand competitive pressures. For service providers in the telecommunication industry, scale can influence a company's ability to bundle products, and its ability to absorb a temporary disruption, acquisition, or misjudgment in the execution of capital investments. Scale is measured by total reported revenue.
Business Profile: Business profile can influence a company's ability to generate operating cash flows and the stability and sustainability of those flows. Core aspects of a business profile that drive success or failure typically include the depth and breadth of the company's product offering, its competitive environment, and the position it occupies in its operating markets. Some considerations include business model, competitive environment, technical positioning, regulatory environment, and market share.
Profitability and Efficiency: Profits are considered because they are necessary to maintain a business' competitive position, including sufficient reinvestment in marketing, research, facilities, and human capital. We consider the level and trajectory of operating margins and revenue together with their sustainability.
Leverage and Coverage: Leverage and coverage measures are considered as indicators for a company's financial flexibility and long-term viability. Financial flexibility is critical to respond to changing consumer preferences, regulatory changes, competitive challenges, and unexpected events. Key metrics include Debt/ EBITDA, Retained Cash Flow/ Debt and EBITDA minus Capital Expenditure/ Interest Expense.
Financial Policy: Management and board tolerance for financial risk is a consideration because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Considerations include a company's public policy commitments, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Considerations: Some other considerations include but are not limited to: our assessment of the quality of management, corporate governance, financial controls, liquidity, non-wholly owned subsidiaries, excess cash balances, event risk, and parental and institutional support.
• Nippon Telegraph and Telephone Corporation
The principal methodology used for the rated entities listed below was Communications Infrastructure published in February 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Communications Infrastructure
Scale: Scale can indicate a company's ability to influence business trends and pricing within its segments and to support a stable or growing market position. Scale can influence resilience to changes in demand or exogenous events, such as natural disasters, macroeconomic shocks, regional disruptions, or technological change. Revenue is an indicator of scale.
Business Profile: The business profile of a communications infrastructure company provides indications of the strength or weakness of its business model based on whether it owns or leases assets, its product and service offering, and the exclusivity of the location of its infrastructure. A communications infrastructure company's competitive environment and business conditions, including the stability and tenor of its contracts, also affects its ability to generate cash flow and raise external capital. Barriers to entry and long-term contracts with strong counterparties can foster stable cash flows. The degree of competition a company faces directly affects its pricing power and marketing expenses. Reliability, product differentiation, execution and competitive cost structures are also considerations.
Profitability and Efficiency: Profits are necessary in order for a company to reinvest in its business and maintain a competitive position, and sustained high profitability generally indicates a substantial competitive advantage. Funds from Operation (FFO) Margin, which is the ratio of FFO to revenue, is an indicator of profitability.
Leverage and Coverage: Leverage and coverage measures are indicators of a company's financial flexibility and long-term viability, including its ability to generate sufficient returns to maintain access to the capital markets. Given the capital intensity of the industry, companies that are able to finance projects with internally generated cash flow and external sources have an inherent advantage. Among others, ratios such as EBITDA minus Capital Expenditures/ Interest, Free Cash Flow/ Debt, and Debt/ EBITDA are indicators of leverage and coverage.
Financial Policy: Management and board tolerance for financial risk is considered because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. The company's desired capital structure or targeted credit profile, its history of prior actions, including its track record of risk and liquidity management, use of cash flow through different phases of economic and industry cycles, and its adherence to its commitments can serve as indicators of financial policy.
Other Considerations: Other consideration can include, but are not limited to, financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends are also considered.
• Chorus Limited
• NBN Co Limited
• Profesional Telekomunikasi Indonesia
• VNET Group, Inc.
• Voyage Australia Pty Limited
The principal methodology used for the rated entities listed below was Government-Related Issuers Methodology published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Government-Related Issuers Methodology
Assigning a Baseline Credit Assessment (BCA): The majority of Government-Related Issuers (GRIs) begin with an assessment of the GRI's standalone strength (i.e. BCA) – its ability to service and repay outstanding debt without recourse to extraordinary support from the supporting government - using the published sector-specific methodology that is most suitable for the predominant activities of the GRI. Our assessment of standalone strength includes any day-to-day support received from the government that can be clearly distinguished from extraordinary support. Support mechanisms, such as an obligation of the government to ensure the GRI's solvency and liquidity, are reflected in the BCA when they are legally or contractually documented.
Government uplift: The GRI's ratings include any uplift due to systemic support and typically focus on three structural factors and three factors explaining the level of the government's willingness to provide support. Structural factors address the legal and quasi-legal aspects of the government's relationship with the GRI and include: (1) guarantees, (2) ownership level and (3) barriers to support. The factors underlying willingness consider the softer connections between the two entities and include (4) the likelihood of government intervention, (5) political linkages and (6) economic importance. Support is determined using a joint default analysis framework which considers an estimate of the likelihood of extraordinary support, an assessment of the credit quality of the supporting government, and default correlation between the two entities.
GRIs without a BCA: In limited instances, it is not possible or meaningful to assign a BCA. The GRI is so inextricably linked to the government that a meaningful standalone BCA cannot be derived. In such cases, a top-down analytical approach is used that chiefly considers the ability and willingness of the government to provide timely support, instead of the usual bottom-up approach of starting with the BCA and then considering uplift towards the government's rating.
• Axiata Group Berhad
• NBN Co Limited
• Singapore Telecommunications Limited
• Telekom Malaysia Berhad
• Telekomunikasi Indonesia (P.T.)
The principal methodology used for the rated entities listed below was Government-Related Issuers Methodology (Japanese) published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com/japan/ratings-news for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Government-Related Issuers Methodology (Japanese)
Assigning a Baseline Credit Assessment (BCA): The majority of Government-Related Issuers (GRIs) begin with an assessment of the GRI's standalone strength (i.e. BCA) – its ability to service and repay outstanding debt without recourse to extraordinary support from the supporting government - using the published sector-specific methodology that is most suitable for the predominant activities of the GRI. Our assessment of standalone strength includes any day-to-day support received from the government that can be clearly distinguished from extraordinary support. Support mechanisms, such as an obligation of the government to ensure the GRI's solvency and liquidity, are reflected in the BCA when they are legally or contractually documented.
Government uplift: The GRI's ratings include any uplift due to systemic support and typically focus on three structural factors and three factors explaining the level of the government's willingness to provide support. Structural factors address the legal and quasi-legal aspects of the government's relationship with the GRI and include: (1) guarantees, (2) ownership level and (3) barriers to support. The factors underlying willingness consider the softer connections between the two entities and include (4) the likelihood of government intervention, (5) political linkages and (6) economic importance. Support is determined using a joint default analysis framework which considers an estimate of the likelihood of extraordinary support, an assessment of the credit quality of the supporting government, and default correlation between the two entities.
GRIs without a BCA: In limited instances, it is not possible or meaningful to assign a BCA. The GRI is so inextricably linked to the government that a meaningful standalone BCA cannot be derived. In such cases, a top-down analytical approach is used that chiefly considers the ability and willingness of the government to provide timely support, instead of the usual bottom-up approach of starting with the BCA and then considering uplift towards the government's rating.
• Nippon Telegraph and Telephone Corporation
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
Please see the Issuer page on https://ratings.moodys.com/japan/ratings-news for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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