This is a bit informative:
City Telecom Shares Rise After Moody's Raises Credit Outlook
By Mark Lee
Feb. 2 (Bloomberg) -- Shares in City Telecom (H.K.) Ltd., a Hong Kong fixed-line operator, increased after Moody's Investor Service raised the company's credit outlook on cost cuts at the telephone service provider.
The stock rose 2.9 percent to HK$1.41 at the end of trading in Hong Kong, after increasing as much as 4.4 percent earlier, compared with a 0.7 percent gain in the benchmark Hang Seng Index.
Moody's raised City Telecom's credit outlook to ``positive'' from ``stable'' yesterday after the Hong Kong-based company said in November that its loss more than halved in the year to Aug. 31 because the phone operator reduced employees and scaled back marketing expenses.
``The change in strategy'' has led to improvements in ``balance sheet strength and overall liquidity,'' Moody's Vice- President Laura Acres said in a statement.
City Telecom's net loss narrowed to HK$92.2 million ($11.8 million) in the business year to Aug. 31, compared with HK$213.3 million a year earlier, following a 34 percent reduction in staff during the year. The company had 2,565 staff at the end of August, compared with 3,896 a year earlier, its annual report said.
Yields on City Telecom's 10-year bonds, which pay an annual interest rate of 8.75 percent, fell to 9.43 percent yesterday, compared with 9.48 percent on Jan. 31, according to Bloomberg data. The company raised $125 million in January 2005 from selling the bonds, which are rated by Moody's at B2, or five levels below investment grade, to finance network construction.
City Telecom has spent $2 billion since 2000 to build its fixed-line and broadband network in Hong Kong, Calvin Lo, a company spokesman, said on Jan. 12.
The company's shares have gained 70 percent this year, outperforming a 3 percent increase in the Hang Seng Index, spurred by speculation the company could sell stakes to investors. Chairman Ricky Wong said on Jan. 22 the company has been approached ``many times'' by potential investors, without providing details.
To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net
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