Rating agency Moody's Investors Service announced yesterday that it has upgraded China Mobile (Hong Kong)'s (CMHK) senior unsecured rating to Baa1 from Baa2, the highest rating of its kind for Chinese mainland enterprises.

Moody's said the rating outlook for CMHK was positive and that the current rating reflects the company's continual strong growth and its robust credit profile.

The upgrade also shows CMHK's position as the leading provider of cellular telecom services, its solid track record of maintaining a conservative financial profile and strong margins, as well as its ongoing growth potential, given the low cellular penetration of China's market with an 18 per cent penetration rate, Moody's said.

It is believed that the upgraded rating will enable CMHK, which now has about US$1.29 billion of foreign debt securities, a stronger pricing power in its future financing initiatives.

Wang Xiaochun, CMHK's chairman and chief executive officer, said yesterday he was pleased to note the upgrade, saying it better reflected the solid fundamentals and strong financial strength of the company.

In a statement released yesterday, Moody's said CMHK had a higher value customer base, and that its strong competitive position was unlikely to unravel in the near future. However, Moody's noted that the operating environment for CMHK would become more competitive as China, a member of the World Trade Organization, must progressively open the telecom market for foreign investment and local fixed line carriers continue to build mobile services.

Other concerns for CMHK included China's still relatively undeveloped regulatory regime and the uncertainty over how the telecom market would evolve structurally in the long term.

(HK Edition 09/19/2003 page7)