Telecom companies in the Asian region, including India, face regulatory risks and intense price competition that can undermine returns and investment, a report by Standard & Poor’s (S&P) Rating Services said today.
The ratings agency said Asia’s large population, GDP growth, and voracious appetite for data services will boost revenues across most of the region’s telecom markets.
“Strong growth in emerging Asia’s telecom markets has lured substantial capital investment and ramped up competition. And the region faces significantly greater regulatory risks compared with developed markets,” S&P credit analyst Paul Draffin said in a statement.
The agency feels that the most hotly contested of the emerging Asian telecom markets are Bangladesh, Pakistan and Sri Lanka, followed by India, Indonesia, Philippines, and Thailand.
These markets remain vulnerable to periodic bouts of intense price competition that can undermine returns and investments, it said.
“From a regulatory perspective, we view the greatest risk to telecom operators to be in Bangladesh, India, Pakistan, Sri Lanka, and Thailand, although proposed reforms could help moderate risks in some of these markets such as India and Thailand,” it said.
The rating agency though said it expects telecom firms to maintain relatively low debt levels, moderating risks and sustaining their credit quality in the next few years.
“This fiscal prudence is likely to continue even as telecom operators fund ongoing network investment, spectrum payments, and mergers and acquisitions in the pursuit of growth,” it added.