Moody's rates Pakistan Mobile note B3

Moody's Investors Service said it assigned a provisional B1 corporate family rating to Pakistan Mobile Communications Ltd. (Mobilink) and a provisional B3 senior unsecured rating to its proposed $250 million notes due 2013, which will be sold in a private placement and will be designed to permit resale under Rule 144A.

The proceeds will be used in part to refinance bank loans and to fund ongoing capital expenditure.

The outlook is stable.

The agency said the ratings reflect Mobilink's strong position as Pakistan's largest mobile operator and management's ability to rapidly roll out extensive network coverage and establish its brand to enhance prospects for strong subscriber and revenue growth.

The rating also reflects the increasingly competitive and fragmented nature of Pakistan's cellular market, the challenges Mobilink faces in managing its growth strategy and profit margin and its projected negative free cash flow position due to substantial growth-driven capex spending and a resultant increase in debt and financial leverage, Moody's said.

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