S&P report: EMEA telecoms 'generally stable'

Standard & Poor's said in a report the credit quality of investment-grade telecoms and satellite operators in Europe, the Middle East and Africa remained generally stable in the second quarter of 2005, despite a continuing tough regulatory and competitive environment in the fixed-line segment and a steep increase in competition in the mobile business.

The report "Industry Report Card: Investment-Grade Telecoms In Europe, Middle East, And Africa" said pressures are significant operating pressure and ongoing M&A activity intensifying across business segments - despite the continued strong uptake of ADSL subscriptions across Europe - on the back of continued fixed-to-mobile substitution and price cuts underpinned by incremental use of voice over Internet Protocol technology.

"Although there were only three exceptions in the period - with the one-notch upgrades of Telekomunikacja Polska SA and Telekom Austria AG, and the one-notch downgrade of Belgacom SA--the trend toward a larger population of ratings carrying negative outlooks was more pronounced," said S&P credit analyst Guy Deslondes.

Only a handful of fixed-line telecoms operators, including Telecom Italia SpA, Telefónica SA, Telekom Austria AG and BT Group , delivered resilient first-quarter 2005 revenues; the others continued to deliver rather poor fixed-line performance, S&P said.

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