Fitch ups Philippine Long Distance

Fitch Ratings said it upgraded Philippine Long Distance Telephone Co.'s both long-term foreign currency and local currency ratings to BB from BB-.

The outlook is stable.

At the same time, the ratings of the company's global bonds and senior notes have been upgraded to BB from BB-, while the rating of the company's convertible preferred stock has been upgraded to B+ from B.

Fitch said the rating action follows a sustained period of improvement in Philippine Long Distance Telephone's operating and financial profile, mostly underpinned by impressive growth in its highly cash-generative and 100%-owned cellular subsidiary Smart Communications Inc., which reported subscriber growth of 48% in fiscal 2003.

While the company's own financial position is weaker than the consolidated profile, Fitch notes that Smart now has greater flexibility to distribute all of its annual net income to Philippine Long Distance. This reduces the risk of structural subordination, which had been of concern in the past.

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