Telstra gets credit downgrade

By Phil Boeyen, ShareChat Business News Editor

Thursday 28th September 2000

Aussie telco Telstra says a credit downgrade from Standard and Poor's was expected and will not have a material effect on the company's overall borrowing costs.

S&P has lowered Telstra's long and short-term corporate credit ratings to A+/A-1 from AA/A-1+. The rating outlook is stable.

Standard and Poor's says the downgrade reflects the company's weaker business and financial profile as a result of its strategy to invest in high-risk, mobile, Internet, and data businesses in the Asian region, and increasing competition in its domestic market.

S&P says while it acknowledges that there are growth opportunities in mobile and data businesses across the Asian region, there is not expected to be any stable operating cash flow the new investments in the near to medium term.

The ratings company says under the current deal Telstra will take on about A$4 billion in additional debt to fund the transaction.

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