Press Release

JCR-VIS Reaffirms Rating of TFC Issue of Telecard Limited at BBB with Stable Outlook

Karachi, Feb 12, 2009: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the medium-to-long term rating of the Rs. 2.4b TFC issue of Telecard Limited (Telecard) at ‘BBB’ (Triple B). The rating had been placed on ‘Rating Watch’ following the moratorium granted by the government on the payment of the frequency spectrum fee. The deferment had resulted in a dilution of the value of the underlying security (frequency spectrum) available to the TFC holders. The Trustee, at that time, decided to defer the disbursement of Rs. 1.6b of the TFC proceeds which had been earmarked for the payment of the frequency spectrum fee. The proceeds were later released after some delay.

JCR-VIS has been monitoring the performance of the company and has noted with concern the stress on the profitability position of the company since FY2006 resulting in equity erosion with retained earnings falling to negative Rs.354m as of September 30, 2008. Also, Telecard has not been maintaining the ‘debt service account’ as laid down in the terms of the TFC; however, Telecard has twice made prepayments aggregating to Rs.500m with the total outstanding TFC amount at Rs.1.39b to mature by May 2011.

The financial stress on the company has started to ease as indicated by the improved margins during 1QFY09. Telecard has been undertaking efforts for reduction in operating costs, while concurrently building a profitable revenue stream. Both, the International Carrier & Wholesale Voice Business and the WLL Business Unit, are contributing to this direction. The management expects this momentum to continue through the balance of the current financial year. Outlook on the assigned rating is ‘Stable’; however, it needs to be reviewed over time in the context of the economy, and its allied challenges.

For further information on this rating announcement, please contact Mr. Safdar Kazi (safdar@jcrvis.com.pk) or Ms. Sobia Maqbool (sobia@jcrvis.com.pk) at 021-5311861 or fax to 021-5311872-3.





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 February 12, 2009 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.