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2007-10-22 02:57:00 p.m. HKT, XFNA
Hong Kong-listed TOM Group placed on creditwatch negative - S&P
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HONG KONG (XFN-ASIA) - Standard & Poor's Ratings Services said it had
placed its ""BB+"" long-term corporate credit rating on TOM Group Ltd on
creditwatch with negative implications.
The ratings agency said it also placed its ""BB+"" issue rating on a 150
mln usd convertible bond issue by TOM Group unit TOM Holdings Ltd on
creditwatch with negative implications.
""The creditwatch actions primarily reflect a significant weakening of the
underlying earnings prospects of TOM's wireless internet services business,
which has historically contributed near 90 pct of the group's revenue,"" S&P
credit analyst Lawrence Lu said in a statement.
The wireless segment's revenue slumped 32.9 pct in the second quarter,
due in part to a structural change in the industry.
Wireless application protocol (WAP) service providers are now required to
prompt users with fee reminders as they use WAP services. This has led to an
overall reduction in revenue for WAP service providers, as customers have
been more conscious about service costs, S&P noted.
TOM's wireless revenue has also been affected by successful strategic
alliances between China Mobile Ltd and select mobile phone manufacturers, it
noted.
Some manufacturers have embedded menus in their handsets that complement
China Mobile's best-selling wireless value-added services.
jun.concepcion@xfn.com xfnjcc/xfnrc
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