Kathmandu. Rating agency, Care Ratings Nepal Limited has revised the credit rating of private sector internet service provider, Classic Tech Private Limited. Care Ratings has affirmed Classic Tech’s long-term banking facility rating of ‘Care NP B’ and short-term facility rating of ‘Care NP F’.
Earlier, Classic Tech’s rating was downgraded to ‘Issuer Not Operating’ for failure to provide required financial information. Classic Tech is the seventh largest internet service provider by market share.
Classic Tech’s revised rating reflects the company’s liquidity pressure, delayed debt repayments, and the company’s mid-level business in a competitive internet market.
The company faces challenges related to revenue concentration, capital expenditures, technology risks, and broadband internet business. Moreover, the recent ruling in favor of the Nepal Telecommunication Authority by the Supreme Court has forced service providers to pay the 4 percent salami and 2 percent rural telecommunications development fees due from the previous year.
Despite these challenges, Classic Tech is leveraging its long-term business experience, 5.77 percent market share in Nepal’s internet market, and an experienced management team. In the last fiscal year, the company achieved a significant growth of 58 percent by reducing bandwidth costs and increasing operational efficiency, resulting in a net profit of Rs 510 million.
Going forward, Classic Tech’s ability to maintain revenue growth, profitability, and capital structure will be key to its credit profile. Additionally, in a competitive market where the top 5 service providers control 72 percent of the market, the company will need to invest in technological upgrades.
Classic Tech has 170,000 customers. Amidst competition and regulatory pressures, the company will need to focus on product diversification, customer retention, and strategic partnerships to maintain its market position.
