Sri Lanka Telecom's (SLT) cash generation continues to be strong despite pressure on profitability due to intense competition and weak macroeconomic conditions in Sri Lanka, according to Fitch Ratings.
In a press release this week, Fitch stated that SLT has an established position as an integrated telecom operator with strong market shares in major operating segments and affirmed SLT's Long-term foreign currency Issuer Default Rating
(IDR) at 'B+'. Fitch simultaneously revised the Outlook to Stable from Negative.
The agency affirmed SLT's local currency IDR at 'BB-' with a Negative Outlook, National Long-term rating at 'AAA(lka)' with a Stable Outlook and its senior unsecured notes due in 2009 at 'B+' based on a recovery rating of 'RR4'.
Fitch stated that the Negative Outlook on SLT's LC IDR reflects risks stemming from a weak regulatory framework and opaque regulatory policies, intense competition and the still weak macroeconomic conditions in Sri Lanka. Furthermore, a new interconnection framework to be implemented in 2010 could add to pressures on SLT's margins and cash generation.