Singapore Telecommunications (Singtel) says it commits to remaining “financially disciplined” and to “maintaining our investment-grade credit rating” on Jan 27.
The comments come after credit rating company Moody’s Investors Service affirmed the telco’s senior unsecured rating of A1.
Moody’s, on the same day, also reiterated the (P)A1 rating on Singtel’ senior unsecured Euro medium-term note (EMTN) programme, as well as the A1 rating on the senior unsecured notes issued by Singtel Group Treasury.
In addition, the agency changed Singtel’s ratings outlook to ‘stable’ from ‘negative’.
Moody’s says the A1 rating reflects the company’s “underlying strength” from its well-established and geographically diversified business platform.
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It also attributes the rating to Temasek Holdings backing the telco up should it find itself in a “distressed situation”.
The agency, however, does not expect “meaningful improvement” in Singtel’s underlying EBITDA over the next 12 to 18 months due to intense competition in Singapore and Australia as well as the negative impact brought about by Covid-19.
"The affirmation of Singtel's A1 ratings reflects the company's leading market positions and regionally diversified cash flow stream from its stakes in various Asian mobile associates. The rating also recognizes the considerable unrealized value of investments that provide the company with significant financial flexibility," says Nidhi Dhruv, a Moody's Vice President and Senior Analyst.
"The change in outlook to stable from negative reflects our expectation that reduced shareholder returns and the adoption of scrip dividend will help lower leverage to 2.4 – 2.5 times over the next two years, from 2.6 times for the last twelve months ended September 2020," adds Dhruv.
Shares in Singtel closed 3 cents lower or 1.2% down at $2.40 on Jan 27.
