Helsinki-based Sonera Group plc, Finland’s largest telecommunications carrier, plans a $1.1
billion issue of medium term notes to help finance its expansion plans.
The partially privatized carrier, owned 78
percent by the government of Finland, has a 68-percent share of the domestic wireless market through its nationwide
Global System for Mobile communications 900 and 1800 networks, according to Moody’s Investors Service. Sonera
also holds a 30-percent share of local exchange carrier subscriber lines.
“As a means of diversifying away
from its domestic market, the company significantly increased its international investments in 1998, and this more-
aggressive strategy has increased [its] risk profile and added some uncertainty as to its future direction,” said Eric
de Bodard, managing director, and Helen Francis, senior analyst, for Moody’s European corporate ratings group,
London.
Moody’s assigned an investment grade rating of A2 to the planned Sonera debt issuance, taking into
account the carrier’s strong reliance on its highly successful mobile business.
“However, the rating also factors
in increased leverage in 1998 [due to additional] international exposure and our opinion that the financial profile may
weaken over time under pressure from shareholder expectations as [Sonera] pursues its strategy to seek out further
growth opportunities in its home and selected international markets,” the Moody’s analysts said.
Francis and
de Bodard also noted that Sonera’s third-generation wireless research and radio-frequency license applications offer
future growth potential. However, they cautioned “the extent to which telecommunications will grow using [3G]
as opposed to … fixed line or other media networks cannot be ascertained precisely.”
