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Fitch: Intense Competition in Malaysia to Narrow Telco Margins

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: 2015 Outlook: Malaysia Telecommunications Services www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=804329">http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=804329 BANGKOK/SYDNEY/SINGAPORE, November 10 (Fitch) Fitch Ratings says in a special report released today that competition in the Malaysian telecom industry will remain intense in 2015, particularly among mobile operators, which could lead to their average operating EBITDA margin narrowing by 1pp-1.5pp. However, competition will not be as fierce in the fixed-line and broadband sector, which we expect to be dominated by Telekom Malaysia Berhad (TM; A-/Negative) in the medium term. Average industry revenue will increase by 3%-5% in 2015 driven by strong growth in broadband and mobile data services. Voice revenue will remain flat, while text revenue may decline as data services cannibalise text messaging. Fitch expects 2015 capex for Malaysian telcos to be unchanged from 2014 as operators will continue investment in their 3G and 4G networks to support data growth. Free cash flow (FCF) will be minimal as telcos' cash flow from operations will barely cover capex and dividends. As a result, Fitch anticipates stable leverage for most telcos unless companies make special dividend payments or undertake large debt-funded acquisitions. The report, "2015 Outlook: Malaysia Telecommunications", is available on www.fitchratings.com or by clicking on the link above. Contact: Obboon Thirachit Director +66 2 108 0159 Fitch Ratings (Thailand) Limited Level 17, Park Ventures, 57 Wireless Road, Lumpini, Patumwan, Bangkok 10330 Nitin Soni Director +65 6796 7235 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.