...Low Rating Headroom: Fitch Ratings expects Singapore Telecommunications Limited's (Singtel) funds flow from operations (FFO)-adjusted net leverage to remain high at around 1.9x- 2.0x for financial year ended March 2015 (FY15) (FY14: 1.9x), given higher capex needs. We forecast FY15 capex to rise to SGD3.2bn (FY14: 2.4bn) before easing to SGD2bn during FY16-FY17. Singtel will spend SGD2.3bn for 4G expansion in Australia and Singapore and sea cable investment, while SGD865m has been used for spectrum payments as of end-2014. Acquisitions to Weaken Leverage: Fitch believes Singtel's SGD2bn earmarked investment up to FY16 for Digital Life (DL) would weaken its credit profile, if executed. However, we believe the firm will only invest this amount in strategic acquisitions if suitable opportunities arise. Singtel has spent about SGD460m to date in acquiring mobile advertising and marketing analytics companies, in a foray into new technology businesses to drive long-term growth. Stable FY15 FFO:...
