Fitch Ratings has upgraded the long-term foreign currency rating of Jordan Mobile Telephone Services Company (JMTS) to BB- from B+. At the same time the agency has affirmed the local currency rating at BBB-. The rating outlook is stable, stated a press release.
The rating action is a result of macroeconomic improvement in the Hashemite Kingdom of Jordan, on the grounds that macroeconomic trends are one of the main drivers of the company's credit profile development.
JMTS is the largest provider of GSM mobile telecommunication services in Jordan, where it trades as Fastlink. Orascom Telecom (OT), which owns 91.6 percent of JMTS, is the leading GSM operator in the Middle East and North Africa.
Historically Fitch has rated JMTS on a stand-alone basis and this view is unaffected by the recent announcement that, subject to regulatory approval, OT has announced the sale of its entire holding in JMTS to MTC of Kuwait.
As a result of this transaction MTC's stake in JMTS rises from 4.9 percent to 96.5 percent. Whilst JMTS had supported OT with its investment in Oratel, Algeria, with equity participation, it had done so in a manner that was consistent with its existing credit risk profile. It remains to be seen whether JMTS will retain its stake in the Algerian business after the change of ownership.
Fitch's ratings reflect JMTS's position as Jordan's leading mobile operator with its highly recognized Fastlink brand. This is despite the first full year of competition from MobileCom, the mobile subsidiary of the fixed line incumbent Jordan Telecom Company (JTC). Throughout 2002, JMTS continued to achieve strong subscriber growth and today mobile subscribers outnumber fixed line users by 25 percent in Jordan.
Growth has been due to the convergence of a number of factors that include improving macroeconomic conditions within Jordan, low fixed line penetration and a highly competitive tariff structure.
Despite the impressive operational performance over the last two years, deterioration in leverage was seen at FYE01. This was due to higher than expected to meet demand as well as making a 28 million Jordanian dinar ($40 million) investment in Oratel Investment, which holds a 43.1 percent stake in Orascom Telecom Algeria. Notwithstanding JMTS's equity contributions, Fitch is satisfied that despite significant ongoing build out costs the company is not obligated to provide additional funding. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
