S&P keeps PLDT’s high credit rating

PLDT Inc. would maintain its status as the dominant telco in the Philippines’ two-player market given its “resiliency” despite fierce competition with Globe Telecom, S&P Global Ratings said.

S&P, which affirmed PLDT’s ‘BBB+’ long-term corporate credit rating with a stable outlook, added the two incumbents could expect no near-term challengers to their industry duopoly following the acquisition last year of San Miguel Corp.’s telco assets.

“We believe that the move will dampen the near-term likelihood of a third player entering the Philippines telecommunication market, cementing PLDT’s already strong market position,” S&P said, citing crucial frequency assets that were once held by SMC and now being used by PLDT and Globe.

In explaining its ratings grade for PLDT, S&P said the company was expected to hold the line on its business fundamentals over the next 12-24 months “despite our assessment of an increase in country risk in the Philippines.”

“We expect PLDT to sustain its dominant foothold in the Philippines telecommunications (telecom) market. The company has showcased a degree of resilience and maintained a strong market position in a highly competitive market,” S&P said.

“Its Ebitda margin is the highest among its regional peers we rate,” it added.

S&P on May 23 lowered the country risk score from “moderately high risk to high risk.”

“This reflects slightly diminished predictability of future policies as a result of the government’s pronouncements on foreign policy and national security,” S&P said.

It added that the rating outlook for the sovereign credit ratings on Philippines was stable.

Meanwhile, the stable outlook on PLDT for the next 12 months reflected S&P’s the view that PLDT would keep its market leadership, and maintain its higher Ebitda margin compared to its regional peers.

“We expect growth in the company’s broadband and data businesses to continue to offset gradually eroding revenue from traditional voice and SMS operations,” S&P said.—MIGUEL R. CAMUS