Talk could get expensive for telecom company

S&P has cut Telstra''s credit rating another two notches - potentially costly for a company with A$12 billion debt.

Standard Poors SP has downgraded Telstras long-term and short-term credit ratings to AA-1 from AAA1, primarily on the back of the companys plans to invest in and form mobile phone and IP backbone joint-ventures with Pacific Century CyberWorks PCCW. The move also reflects increasing competition in the Australian telecoms market, SP says.

The tone of the press release from SP this morning would suggest that greater rating emphasis has been placed on the heightened business risk associated with its Asian joint-venture with PCCW, says ANZ Investment Bank credit research analyst Siong Ooi.

Whats interesting is that the downgrade, which at two...

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