Fitch upgrades Telkomsel

Fitch Ratings said it upgraded Indonesia-based PT Telekomunikasi Selular's (Telkomsel) long-term local currency issuer default rating to BBB- from BB+ and affirmed the company's BB- long-term foreign currency issuer default rating.

The outlook is stable.

The upgrade recognizes Telkomsel's track record of having achieved consistently impressive financial and operating results, its entrenched position as Indonesia's leading cellular operator and its robust growth prospects, the agency said. Total subscribers increased to 29.3 million at June from 24.3 million at December 2005, implying annualized growth of 41% and a market share of over 50%.

Fitch said the ratings also take into account the prospect of competition intensifying in the cellular segment with new entrants anticipated to launch their services by late 2006, sustained heavy network investments by existing operators and the rapid strengthening of the number three operator, PT Excelcomindo Pratama's franchise. The agency said it expects, however, that the new entrants will face formidable challenges given the entrenched positions of the existing operators.

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