Fitch Ratings has affirmed the National Long-Term Rating of Sri Lanka-based telecoms company Dialog Axiata PLC at ‘AAA (lka)’. The Outlook is Stable. AAA’ National Ratings denote the highest rating assigned by the agency in its National Rating scale for that country.
This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country or monetary union KEY RATING DRIVERS Mobile-Market Leader: Dialog’s Standalone Credit Profile (SCP) of ‘aaa(lka)’ is underpinned by its market leadership in the expanding mobile and pay-TV segments. “We believe Dialog will continue to gain revenue market share from smaller telcos, given its superior execution and mobile networks.”
“We believe Dialog could receive support from its 83% Malaysia-based parent, Axiata Group Berhad (Axiata), if its SCP were to weaken.”
“We assess the relationship between Axiata and Dialog as one of ‘strong parent, weaker subsidiary and moderate linkages’ under our Parent and Subsidiary Rating Linkage criteria.”
“We forecast 2020 revenue to rise by a high single-digit percentage following a 25% tax cut in telecommunication levy, a drop in value-added tax to 8%, from 15%, and the removal of the 2% nation-building tax. Notwithstanding our lower expectations of national GDP growth, we believe demand for 4G data and fixed-broadband will remain strong and online connectivity and remote access will be boosted due to the COVID-19 pandemic.”
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