However, agency’s outlook for the Abu Dhabi-listed Qtel remains ‘stable’.
Moody’s noted the relatively high debt leverage at Qtel’s corporate level in addition to debt at international subsidiaries in higher risk markets, while reviewing the ratings.
“The exposure to emerging markets though is offset by diversification,” the agency said in its review.
However, the agency highlighted that the Doha-based telecom firm continues to have a high cash balance, which stands at $3.39 billion as of June 30, 2010. Qtel has, over the recent quarters, has termed out its debt, which has strengthened the telecom firm’s liquidity profile and significantly reduced the refinancing risk.
In July 2010, Qtel’s corporate credit ratings by Standard & Poor’s Ratings Services were increased from ‘A-’ long term to ‘A’ and from ‘A-2’ short term to ‘A-1’. The upward revision followed S&P’s upgrade of the sovereign ratings on the state of Qatar.
Fitch Ratings also reassigned an issuer default rating of ‘A+’ in early 2010.
Qtel recorded revenues of $6.6 billion and a net profit of $1.070 billion in 2009.
Qatar Telecom has a presence in 17 countries, where it provides voice and data services to nearly 66 million customers.
“Qtel expects no material impact from the Moody’s rating change”, the telecom said in a statement to Abu Dhabi Securities Exchange on Thursday. “The one notch downgrade mainly results from Moody’s change in assumptions and methodology regarding government support in line with other government-related issuers,” the statement said.
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