Fastest Growing Telecom Operator Revenue APAC — Moody’s – Manila Bulletin

According to Moody’s Investors Service’s latest report published on September 7, 2022, Asia-Pacific (APAC) telecommunications (telecom) company revenues will see their strongest growth since 2016, excluding 2021’s weak base effect.

The report describes the relative positioning of 20 APAC-rated telecom operators, but only covers one local telecom operator, PLDT Inc.

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“APAC’s data and broadband consumption will thrive, while further consolidation will temper competition in the coming years,” said Annalisa di Chiara, senior vice president at Moody’s.

“These dynamic conditions will propel revenues at a rate of 4.0% to 4.5% through 2023,” she predicted.

Rising data and broadband consumption as well as industry consolidation tempering competition will support revenue growth.

Meanwhile, capital expenditure intensity (capex) for telecom operators in emerging APAC markets such as the Philippines, China, India, Indonesia and Malaysia will be around 30 to 33% as investment in 5th generation (5G) technology increases.

The level of investment would be lower, at 16-18% for telecom operators in the region’s developed markets of Australia, Hong Kong, Japan, Korea, Singapore and New Zealand, similar to the level of the last two years.

“Most telecom operators in APAC can fund capital expenditures with cash flow despite pressure on profitability from fierce competition,” said Nidhi Dhruv, vice president and principal analyst at Moody’s.

Despite potential investments or debt-financed expansion in businesses such as digital services, data centers and digital banking, “average industry-wide leverage will remain stable at 2.3x-2 .5x, supported by EBITDA growth and debt levels relatively unchanged from 2021,” he said. added.

This compares to 2.4x leverage for the 12 months to March 2022.

Moody’s expects debt levels to remain relatively unchanged at around $195 billion over 2022-23.

At the same time, the liquidity of the telecom sector will remain solid.

“We expect telecom operators in the region to maintain their track record of sustained access to capital markets and bank financing, even through economic cycles,” the report said.

Telecom operators are also selling non-core assets such as towers to maintain balance sheet strength as capital spending remains high.

Moody’s new report and data supplement compares key financial metrics of the 20 rated APAC telecom operators, the regulatory environment in which they operate, and environmental, social and governance scores.

Their debt levels are a key differentiator of credit quality. All but one are investment grade and several have parental support.

By contrast, only 40% and 28% of rated telcos in Europe, the Middle East and Africa (EMEA) and the Americas, respectively, are investment grade.

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