Fitch retains highest short-term rating for Tulip Telecom

Global rating agency Fitch today retained the highest short-term debt rating for Tulip Telecom due to the company's position as the market leader and its large network.     

"Tulip Telecom rating is based on its position as the market leader in the corporate data connectivity (CDC) business, its pan-Indian presence and a large network of wireless last-mile connectivity," the rating agency said in a release.     

It further said that the ratings also factor in steady growth in revenue and a significant improvement in its margins on earning before interest, taxation, depreciation and amortisation due to the changing business mix.     

Fitch Ratings has today affirmed Tulip Telecom's Rs 60 crore commercial paper program's national short-term rating at F1.     

The rating agency added that although the company's financial leverage has been low historically, it is estimated to have increased in 2008-09, with the use of debt for capex. However, it is not expected to increase further from 2009-10, given the moderate capex plans.     

The company's rating is also supported by the increasing broadband penetration in India due to demand from both the private sector and the government, Fitch said.