(MENAFN - The Peninsula) Fitch Ratings has affirmed Ooredoo QSC's long-term foreign currency Issuer Default Rating (IDR) at 'A' with stable outlook. Qtel International Finance Limited's global medium-term note programme and Ooredoo Tamweel Ltd's Sukuk programme have also been affirmed at 'A'
Ooredoo's IDR is notched down from Fitch's credit assessment of Qatar on a top-down basis, reflecting strong legal, operational and strategy ties between the two. This is in accordance with the agency's Parent and Subsidiary Linkage criteria. The State of Qatar, directly and indirectly owns 69 percent of Ooredoo
Ooredoo's ratings reflect Fitch's assessment of Qatar's creditworthiness due to strong operational and strategic ties. Strong ties are supported by the ownership of a golden share of Ooredoo by the Qatari government. This implied state support underpins the strong ratings and offsets risks associated with diversification into weaker-rated emerging markets, slowing sector growth and M&A risk
In line with Fitch's expectations, Ooredoo's revenue grew by a modest 1 percent in FY13, due to maturing mobile markets, increasing competition and changes to the technology landscape. The company has responded by shifting its strategy towards efficiency improvements and focusing on data services, which should help stabilise operating margins in the medium-term. Nevertheless, Fitch expects pressure in this area to continue over the short- to medium-term with no revenue growth and EBITDA margins under pressure at low 40 percent-41 percent on a group basis.
The ratings agency noted Ooredoo generates approximately 22 percent of its consolidated EBITDA from Qatar and it expects contribution from the domestic business to remain around 20 percent in the coming years. Other GCC countries, mainly Oman and Kuwait, account for 10.5 percent of the EBITDA, with the remainder being derived from Indonesia, Iraq, Algeria and Tunisia.
Ooredoo's operations in these lower-rated countries continue to generate stronger headline growth than the domestic market, but are exposed to higher political and economic risks