Corporate News

Fitch affirms Globe’s ratings

Posted on November 24, 2012

DEBT WATCHER Fitch Ratings on Friday affirmed Globe Telecom, Inc.’s long-term foreign and local currency issuer default ratings at BBB-, giving the grade a stable outlook.

“The ratings reflect Globe’s stable credit metrics as the number-two telecommunications operator in the Philippines with over 30% market shares in wireless and broadband,” it said in a statement.

Fitch said the stable outlook reflects its view that Globe’s financial metrics, despite on-going margin deterioration, will remain commensurate with its current rating level over the next 12 to 18 months.

Fitch said the company’s operating margin will continue to decline over the medium term amid growing competition on unlimited tariff offerings and handset subsidies.

“Fitch believes that this trend is unlikely to reverse in a maturing wireless industry with an over 100% penetration rate,” the credit rater said. “This also means subscriber acquisition cost will increase as operators seek to protect market share.”

Fitch said the National Telecommunications Commission’s directives for local telecommunication companies to slash regular text message rates to 80 centavos from P1 will not affect the firm’s credit profile.

“This is because revenue generated from standard text service, subject to the regulation, is significantly lower as a share of total revenue than that from unregulated bucket-pricing tariffs,” the credit rater said.

Globe Telecom’s shares dropped by 0.35% or P4 to P1,135 apiece on Friday. -- Cliff Harvey C. Venzon