Batelco boost as rating is affirmed [Gulf Daily News (Bahrain)]
(Gulf Daily News (Bahrain) Via Acquire Media NewsEdge) MANAMA: Fitch Ratings has affirmed Batelco's Long-term foreign currency Issuer Default Rating (IDR) at BBB-.
The Outlook on the IDR is Stable.
The rating reflects Batelco's leading position in the domestic market, its robust free cash flow on a group level despite elevated competition and earnings margin pressure.
Batelco's IDR reflects Fitch's assessment of the sovereign's creditworthiness, given its strong operational and strategic ties with Bahrain.
Batelco is 78 per cent directly and indirectly owned by the Bahrain government. It is a flagship company and strategic investment for the state as telecommunication is highlighted as a core industry.
Fitch's approach and top-down notching methodology takes into account the assumed government support in line with Fitch's parent and subsidiary rating linkage methodology.
The company's acquisition strategy is focused on mobile and broadband operations in growth markets and management is not interested in capital-intensive greenfield operations.
Batelco has recently expressed interest in Cable & Wireless Communications' Monaco and Islands business division but discussions are still in the early stages.
The Stable Outlook reflects the limited growth prospects in the domestic telecom market.
Fitch expects the company to retain its post-paid subscriber base and a return to rational competition in 2013 that has proven disruptive to all market participants.
The main risk for the company is the domestic operation, as it is facing competition from a new entrant, VIVA, operated by Saudi Telecom Company, which is able to compete aggressively on price.
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