Baku, Azerbaijan, Oct. 26
By Rashid Shirinov – Trend:
The revenue growth of Kazakhstan-based telecommunications operator Kazakhtelecom JSC stood at 2.7 percent in the first half of 2018, S&P Global Ratings said in a statement.
Last year the revenue growth was 2.1 percent. Meanwhile, EBITDA (earnings before interest, taxes, depreciation, and amortization) margin expansion was 0.5 percent in 2017 and another 1 percent in the first half of 2018.
“This is supported by good dynamics in the broader Kazakhstan telecommunication market, in particular increasing subscribers as well as higher average revenue per user in broadband segment,” the report said.
Kazakhtelecom benefits from its dominant position in the fixed-line telecommunication market in Kazakhstan with 68 percent in broadband market, as well as from growth in the company's market share in the pay-TV segment to 43 percent in 2017 from 40 percent in 2016.
Thus, S&P Global Ratings has affirmed its long-term credit rating on Kazakhtelecom at 'BB+', the outlook is stable. At the same time, the national scale rating on Kazakhtelecom rose to 'kzAA' from 'kzAA-'.
“The stable outlook reflects S&P Global Ratings’ view that Kazakhtelecom's adjusted debt to EBITDA will remain below 1.5x, even after executing the option to buy and consolidate the JV with Tele2 in 2019-2020. The outlook also factors in the expectation that Kazakhtelecom's stand-alone revenues will modestly increase,” said the report.
S&P Global Ratings could consider lowering the rating if Kazakhtelecom's leverage sustainably exceeded 1.5x due to higher-than-expected dividend distributions, coupled with declining revenues or margins due to stronger competition. Although not the base case, the rating could also be lowered if company's corporate governance deteriorated.
“S&P Global Ratings sees rating upside as remote, given the company's relatively limited scale compared with global peers and its limited geographical diversification with concentration on one country with high country risk,” the report said.