Fitch affirms KT Corp.

Fitch Ratings said it affirmed KT Corp.'s long-term foreign- and local-currency issuer default ratings at A.

The outlook is stable.

The affirmation reflects KT's position as a fully diversified telecommunications operator in South Korea, with leading market positions in the fixed-line and broadband businesses, and the second-largest market share in the wireless segment, the agency said.

But the company has little headroom in its A ratings and further declines in telecom service margins or the absolute level of EBITDA will likely to lead to a negative rating action, according to the agency.

The company's financial leverage, of net debt to EBITDAR, rose to 1.7x at end the of 2011 from 1.3x at the end of 2010.

Fitch said it forecasts that KT's leverage will improve significantly from 2012, with net debt to operating EBITDAR falling well below 1.5x, due to cash received from the securitization of handset installment receivables.

The agency said it does not foresee any material improvement in KT's operating margins in 2012.

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