Hong Kong, December 17, 2015 — Moody’s Investors Service has today
downgraded P.T. MNC Sky Vision’s corporate family rating to B2 from B1.
The rating outlook is negative. The rating action concludes the review for downgrade initiated on 25
September 2015. Subsequent to today’s rating action, Moody’s will withdraw MNC’s
corporate family rating for its own business reasons.
"The downgrade primarily reflects the refinancing risk associated with
Sky Vision’s USD243 million bank loan — the bulk of which matures in
November 2016 — and the rise in leverage due to its significant and
unhedged foreign-currency exposure and its weakening operating
performance," says Annalisa Di Chiara, a Moody’s Vice President and
Senior Credit Officer.
Its EBITDA margin has also deteriorated, given that all of its revenues
are in rupiah, while a significant portion of its programming costs are
in USD. Furthermore, the pace of subscriber growth has slowed from
Although Sky Vision was in compliance with its bank covenants as of 30
September, Moody’s estimates only marginal, if any, covenant headroom
under the leverage ratio for the company’s USD bank loan remains.
Moody’s expects rising competition and piracy issues in the Indonesian
pay-TV market to continue to temper the growth in Sky Vision’s
subscriber numbers and ARPU over the next 12 months.
As a result of all these factors and because the company needs to continue
to borrow to fund its operations, Moody’s forecasts leverage — as
measured by adjusted debt/EBITDA — to rise into the 3.5x range over the
next six months from 3.2x as of 30 September.
In June, the company announced a share buyback program, to be implemented
by January 2017, of up to 5% of its paid-up capital or a maximum of
IDR636 billion, which given our expectations for negative free cash flow,
would likely have to be funded by debt. However, this scenario is not our
The negative outlook reflects the refinancing risks associated with its
USD243 million bank loan including its ability to remain compliant with
its bank covenants.
Moody’s will withdraw the rating for its own business reasons. Please
refer to the Moody’s Investors Service’s Policy for Withdrawal of Credit
Ratings, available on its website, www.moodys.com.
The principal methodology used in this rating was Global Pay Television –
Cable and Direct-to-Home Satellite Operators published in April 2013.
Please see the Credit Policy page on www.moodys.com for a copy of this
Headquartered in Jakarta, P.T. MNC Sky Vision is a provider of
direct-to-home pay-TV services. The company is 77.3% owned by PT Global
Mediacom Tbk, a diversified media company, and which is in turn 50.24%
owned by P.T. MNC Investama Tbk. Global Mediacom and MNC Investama are
publicly listed in Indonesia.
Annalisa Di Chiara
VP – Senior Credit Officer
Corporate Finance Group
Moody’s Investors Service Hong Kong Ltd.