Press Release

JCR-VIS places Rating of TFC Issue of Telecard Limited on Rating Watch

Karachi, October 27, 2005: JCR-VIS Credit Rating Co Ltd (JCR-VIS) has placed the medium to long-term rating of A (Single A) to the TFC issue of Rs. 2,400m of Telecard Limited (Telecard) on ‘Rating Watch’.

This follows a request by the private sector wireless local loop operators to the Government of Pakistan for deferral of the balance fifty percent payment on account of wireless local loop license and frequency spectrum fee for a period of at least four years. The deferral has been requested on the basis that a similar allowance has already been given to the mobile service providers. The management of Telecard is confident that the requested relaxation will be granted, however, a formal response from the government is still awaited in this regard. Pending a final decision, Telecard has not yet deposited the balance amount even though it has raised the necessary financing through the subject TFC issue and the funds earmarked for this purpose are currently lying unutilized. We have been given to understand by the management of Telecard that the other wireless operators have also not paid the balance fee.

Although, if granted, this exemption will have a beneficial impact on the future cash flows of the company, JCR-VIS will have to balance this against the dilution of the key credit enhancing security underlying the TFC issue, i.e. the assignment of the licenses pertaining to local loop operations and frequency spectrum of Telecard. The exact impact will become known once the formal response from the government to the local loop operator’s request has been received. In case the response is in their favour (as expected by Telecard’s management), Telecard will then have to approach the TFC holders for approval to changes in the security structure of the TFC issue.

JCR-VIS will continue to monitor developments in this regard and will inform the public when any further rating action is warranted.

For further information on this rating announcement, please contact Mr. Safdar Kazi (safdar@jcrvis.com.pk / Ext: 221) or Mr. Saad Ahmed Madani (saad@jcrvis.com.pk / ext: 219) at 5671822/5671833/5680996 or fax to 5681105/5671600.

Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright October 27, 2005 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.