...Tax Changes Credit Negative: Fitch Ratings believes that Sri Lanka Telecom PLC's (SLT) 2015 operating EBITDAR margin could decline to 26% (2014: 30%) and its funds flow from operations (FFO)-adjusted net leverage could deteriorate to 1.8x (2014: 1.1x) if it were to pay an additional LKR3.5bn-4bn in recurring and one-off taxes proposed in the Sri Lankan government's interim budget announced in February 2015. However, SLT's ratings will remain unaffected as headroom is sufficient. Acquisition Risk: SLT's plan to undertake a debt-funded acquisition of a smaller operator in 2015 could threaten its National Long-Term Rating, but not its IDRs. Any rating action would depend on the acquisition price and forecast financial profile of the combined entity. Taxation changes will hasten industry consolidation as the number of telcos could fall to three from five. Two smaller loss-making operators could exit the industry. Reduced Ratings Headroom: SLT's 'BB-' IDRs have sufficient ratings headroom to...
