Business

S&P cuts rating outlook for KT Corp. to negative

English.news.cn   2012-06-14 17:52:52            

SEOUL, June 14 (Xinhua) -- Global credit rating agency Standard & Poor's said Thursday that it cut the outlook for South Korea's wireless carrier KT Corp.'s 'A' long-term credit rating to negative from stable due to challenging operating conditions.

"We believe KT Corp. will face intensifying competition, uncertain regulatory conditions, and continuous declines in revenue in its fixed-line voice business," said Park Jung-hong, a credit analyst at S&P in Hong Kong.

Park noted that free mobile voice-over-Internet protocol (mVoIP) services such as Kakao Talk's voice talk service, the most popular mobile messenger in South Korea, could potentially threaten KT Corp.'s wireless and fixed-line voice revenues.

Kakao, the South Korean operator of free text-messaging application Kakao Talk, said last Monday that it would launch the free voice call service 'Voice Talk' that will work on both Google Android and Apple iOS operating systems over Wi-Fi and 3G data networks using mobile mVoIP.

Voice Talk was expected to add capital expenditure burden for the mobile operator as the free phone service will increase the mobile data traffic sharply. Greater use of Voice Talk may also threaten voice-call business of the mobile operator.

The rating agency said that KT Corp's credit quality was expected to remain weaker than those commensurate with the current ratings in the next six to twelve months, but it noted that the company will strive to reduce the reported debt substantially over the next one to two years through securitization of its handset receivables.

KT Corp. disposed of its handset receivables in April with the issue of asset-backed securities (ABS) in order to alleviate a rising working capital burden due to rapid growth in smartphone sales.

Editor: Deng Shasha
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