Fitch: Tiphone bond A-(idn)

Fitch Ratings said it assigned a national long-term rating of A-(idn) to PT Tiphone Mobile Indonesia Tbk., along with an A-(idn) rating to its Rp 2 trillion bond program and Rp 500 billion bond issued under the program.

The outlook is stable.

The ratings reflect the company’s strategic business relationship with PT Telekomunikasi Selular Tbk., Fitch said.

Tiphone’s main business is the distribution and sale of prepaid vouchers for mobile phone services and the company accounts for 20% of Telkomsel’s sales of prepaid vouchers, the agency said.

The ratings are constrained by the high working capital needed for its handset sales business, Fitch said.

The company forecasts increases in working capital will consume a significant proportion of funds flow from operations over the next four years, the agency said.

Tiphone’s credit profile also is affected by an expectation of higher inventory risks in the handset business as competition in the low-end segment will continue to be intense, Fitch added.

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