Telecom is at high risk of regulatory intervention hitting profits, says ratings agency Fitch.
Its assessment of telcos in 13 countries across the Asia-Pacific region shows Telecom, with operators in Australia, South Korea and Sri Lanka, ran a high risk of regulatory changes impacting free cash flow.
The Fitch scorecard
measured the likelihood of a government stepping in to increase competition, lower tariffs, promote uneconomical capital expenditure and the ability of telcos to defend against regulatory action.
Telecom scored six out of 10 on the scale, with TelstraClear and Vodafone said to be at medium-to-high risk of regulatory impact with a score of five.
New Zealand ranked eighth equal with India, scoring 5.5 out of 10.
"The recent regulatory developments in [Australia and New Zealand] are addressing market structure, and in particular the vertical integration of the incumbents," said the report.
"These changes could potentially lead to loss of market share, particular in the high-margin/cash generative fixed-line segments; margin contraction; and, in the case of Telecom, potentially compete with the Government's fibre rollout. Therefore, these changes will have a greater negative impact on the incumbents."
Fitch will release a more detailed report on the Australian and New Zealand market next week.
INTERFERENCE
Regulatory risk (out of ten)
* 1. Malaysia 3.5
* 2. Hong Kong 4.5
* 3. Singapore 4.6
* 4. Philippines 4.9
* 5. Taiwan 5.0
* 6. Thailand 5.3
* 7. China 5.3
* 8= New Zealand, India 5.5
* 10. Indonesia 5.9
* 11. Australia 6.0
* 12. South Korea 6.0
* 13. Sri Lanka 6.5
