APAC telcos face tighter, but healthy margins

Joseph Waring
17 Dec 2013
00:00

Telcos’ average adjusted ebitda margins in the Asia-Pacific region are forecast to drop 0.5% to 1% next year, according to Moody’s. But margins will remain at a health 37% - 38%, a level it says is consistent with the margins of major European telcos, with ratings in the A to Baa range.

Moody’s expects APAC telcos’ revenue to grow an average of 4% over the next 12 months -18 months, which is in line with average GDP growth rates in the region.

"Increased data usage on mobile phones will continue to drive the industry's revenue growth, although rising mobile-penetration rates and competition will slow the pace of growth," says Yoshio Takahashi, a Moody's assistant VP and analyst.

He said capital spending as a percentage of revenue will decline to about 20%, as most firms complete their 3G or 4G rollouts. "But leverage will remain moderately high, as the companies deploy excess cash to increase shareholder returns, rather than significantly reducing debt."

A Moody's report says that as the industry continues to show signs of maturity (slower earnings growth and stabilizing levels of capex), many companies will consider increasing dividend payouts, paying special dividends

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