Moody’s reviews Qtel’s rating for possible downgrade

Moody's Investors Service has placed the A1 long term ratings for Qatar Telecom Q.S.C. (Qtel), the A1 rating for Qtel International Finance Limited and A1-rated bonds issued under Qtel's GMTN programme under review for possible downgrade following the change in outlook to negative from stable of the Ba1 Corporate Family Rating for PT Indosat Tbk, of which Qtel owns 65%.
Indosat's covenants limit Debt to EBITDA to 3.5 times maximum, which Moody's estimates stood at 2.9 times on December 31, 2009.
Although Qtel's group liquidity profile is strong with bank balances and cash of QR 11.5 bln (USD 3.2 bln) per December 31, 2009 and debt maturities in 2010 of QR 1.9 bln Moody's will review the general reliance of international operations on support from Qtel as well as government support assumptions for Qtel itself, which currently lift the ratings up by four notches from its Baa2 baseline credit assessment.
Ratings currently assume that Qtel fully extends shareholder support to Indosat in a timely manner. However, should the expected performance improvements at Indosat fail to materalise Moody's could change the ratings for Qtel if this were to result in a significant cash call for Qtel that would weaken its liquidity profile.
Qtel is Qatar's incumbent integrated telecom services provider and has over the past years expanded into North Africa, the Middle East and Asia where it has operations in 15 markets. The company recorded revenues of QR 24 bln (USD 6.6 bln) and a net profit of QR 3.9 bln (USD 763 mln) in 2009.
Indosat is the second largest cellular operator in the country, as well as its leading provider of international call services.