Moody's cuts Mobile-8

Moody's Investors Service said it downgraded to B3 from B2 the corporate family and senior unsecured bond ratings for PT Mobile-8 Telecom Tbk.

The outlook is negative.

The downgrade concludes the review that began on Feb. 19 after company announced the resignation of its president, chief financial officer and chief operating officer.

"The rating downgrade considers Mobile-8's weaker-than-expected operating performance in 2007 and [first quarter], a result of a more challenging competitive environment and the problems derived from the delay in its network rollout," Ivan Palacios, a Moody's analyst, said in a written statement.

"The company may face liquidity constraints and may have to rely on access to external funding to finance its capital expenditure plans," Palacios added.

The B3 rating also recognizes the strong growth prospects of the Indonesian mobile market, Mobile-8's more cost efficient network and the value of having a nationwide license for both cellular and fixed-wireless, the agency noted.

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