Asia-Pacific telecom sector to have higher free cash flow in 2010: Fitch
25 Jan 2010
Mumbai: Fitch Ratings today said that the 2010 outlook for the overall Asia-Pacific telecom sector remains stable.
"Most operators will be able to continue to weather any adverse economic conditions and maintain their credit profiles thanks to robust liquidity, relatively low gearing, and strong free cash flow (FCF) generation," says Matt Jamieson, senior director and head of Fitch's Asia Pacific telecoms media and technology team.
Although competitive factors are expected to drive revenue growth and margins lower in 2010 earnings, curtailed capital expenditure budgets are likely to result in higher free cash flow generation for the average Asia-Pacific telecom operator, the agency noted in a new report, Asia Pacific Telecoms Credit Outlook 2010.
Fitch expects top-line revenues for the 23 telecom operators it rates across Asia Pacific to rise by an average of only 2.7 per cent in 2010, which, although up from the prior year, is well below 2008's 7.7 per cent.
"Whereas average revenue growth has historically remained above GDP growth, the sector appears to have reached an inflexion point in 2009 - with average revenue growth below the weighted average Asia-Pacific country GDP growth of 1.9 per cent," adds Jamieson.
"While the economic downturn may play a small part, rising penetration levels and tariff-discounting in emerging markets, including China India, Indonesia and Thailand, are the more important factors keeping a lid on the average telecom operator's revenue growth in 2010," adds Jamieson.
