NEW YORK-Moody’s Investors Service has changed to stable from negative its outlook on $279
million in Ba1-rated debt securities issued by SK Telecom Co. Ltd., Seoul, South Korea.
“The change in
outlook is driven by strong growth in SK Telecom’s cellular subscriber base and a more stable environment in
Korea,” the rating agency said.
During 1998, Moody’s said wireless telecommunications subscribers in South
Korea increased to 13.5 million from 6.9 million, and penetration levels doubled to 30 percent. SK Telecom holds a
market share of about 40 percent.
With its nationwide Code Division Multiple Access network nearly complete, SK
Telecom “has been able to maintain solid growth in its CDMA subscriber base, [which] has more than
compensated for phasing out analog and a fall in the number of paging subscribers,” Moody’s said.
However,
Moody’s analysts Charles Macgregor and Dennis Saputo also cautioned that operating conditions in South Korea’s
wireless telecommunications market remain volatile.
As of April 1, the five cellular and personal communications
services providers in the country will be barred from enforcing “minimum term contracts on new
customers,” they said. Additionally, as of that date, the Korean Ministry of Information and Communication has
imposed a significant reduction in handset subsidies, which should slow new subscriber additions while also reducing
customer acquisition costs.
“The key factor will be the ability of the five cellular providers to attain critical
minimum subscriber levels by April 1,” Macgregor and Saputo said.
