Bahrain Telecommunications (Batelco) said it had received its first public credit ratings, paving the way for the company to issue investment-grade bonds.
Fitch has given Batelco an issuer default rating of “BBB-” and a stable outlook, while Standard & Poor’s has assigned “BBB-” long-term and an “A-3” short-term foreign and local currency ratings and a negative outlook.
“These ratings will further enhance our ability to diversify our sources of funding should we seek to secure future financing from debt or capital markets,” Batelco Chief Executive Sheikh Mohamed bin Isa Al-Khalifa said.
Debt-free Batelco had a cash and bank balance of $230 million as of Sept. 30.
“The only reason to issue bonds would be for an acquisition,” Reuters quoted Nishit Lakhotia, telecoms analyst at Securities & Investment Co. (SICO) in Bahrain as saying.
“That doesn’t mean Batelco will soon be coming out with a bond issue — telecoms acquisitions in this region take a long time and there’s no guarantee they will succeed.”
The Batelo statement said the ratings underpin the group’s strong credit quality and reflect its market leading position in Bahrain’s telecommunications sector as underscored by its robust position in the mobile market and other segments, as well as the group’s continued strong profitability and significant cash flow generation, which supports a sound liquidity profile.
The ratings are also indicative of the strength of the group’s strategy and successful efforts in diversifying its revenue and profits via expanding its overseas operations, which have grown in recent years to include a strong and growing presence in seven markets across the MENA region and India, as well as future plans for further geographic diversification and growth in overseas markets.
The Group CEO added: “These ratings affirm the Group’s ongoing success in managing our operations both at home, where we remain the market leader, and across our growing network, where we continue to gain traction and achieve positive growth both in terms of customer numbers and revenues.”
In September, Batelco and Kingdom Holding scrapped their joint $950 million bid for a quarter-stake in telco Zain Saudi more than six months after initial terms were agreed due to disagreements over the latter’s debt guarantees.
Batelco had a 37 percent of Bahrain’s mobile subscribers in 2010 and fierce domestic competition from units of Kuwait’s Zain and Saudi Telecom Co. is pushing the Bahraini operator to look abroad for growth.
Batelco also has interests in Egypt, Jordan, Kuwait, India, Yemen and Saudi Arabia, with these providing about a third of revenue in the first nine months of 2011, while it has reported declining profits for six straight quarters.
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