Asia's telecommunications markets face more financial and business risks in the years ahead, according to Standard & Poor's (S&P). The United States credit rating company warned of more debt default among Asian corporates after Philippines' Bayan Telecommunications and Australia's One.Tel failed to meet their debt rated obligations earlier this year. 'There will be winners and losers,' said John Bailey, director of S&P in Hong Kong. 'Those who do not have strong market share and critical mass are the most vulnerable.' S&P said that of the US$74 billion global default payments so far this year, 40 per cent came from telecoms companies, largely in the US. Mr Bailey said investors were very selective in picking which company to invest in, waiting cautiously for clearer market signals. S&P said telecoms operators worldwide had raised US$171 billion in debt as of October 1, compared with a full-year US$190 billion last year. Asian telecoms debt made up about 5 per cent of the total, up from 4.5 per cent last year. Mr Bailey said many Asian operators were turning to the debt market after being unable to cash in their stocks or assets in the depressed environment. Moreover, vendor financing was no longer a common option for operators, nor the usual support from their parent companies, which had other businesses to support in the downturn. But Mr Bailey said the trend in financing still favoured large operators with the right business strategy and strong financial profile. Mr Bailey said Pacific Century CyberWorks' failure to launch a US$2.5 billion offering amid Argentina's crisis in July was due, in his view, to wrong timing and the jumbo issue size. CyberWorks yesterday issued 30 billion yen (about HK$1.92 billion) of euroyen guaranteed notes. Hong Kong's dominant telecoms operator was the only fixed-line or mobile company to record a first-half profit in the competitive environment. Mr Bailey said many SAR operators had continuing operating losses, and some could not tolerate more bleeding before gaining entry to China. While not predicting that any firms would enter bankruptcy, Mr Bailey said mobile operators that did not have a third generation licence would likely be marginalised and could be merged with other operators. Despite China having the world's largest mobile subscriber base, S&P raised questions over the market's prospects, because of regulatory uncertainties. Mr Bailey said deregulation and restructuring exercises had brought many uncertainties, including when policies such as the calling-party-pays billing system would be implemented and how the listing of China Telecom would impact the market. He said Beijing still had to map out China's telecoms laws. 'The Chinese Government is going to deregulate orderly, but it will be on China's terms,' Mr Bailey said. Uncertainties over China's regulatory environment sent its two largest mobile operators to their recent trading lows. Shares of China Mobile and China Unicom, the No 1 and No 2 operators, have fallen more than 13 per cent this week. China Mobile yesterday closed off 6.78 per cent at HK$21.30, while China Unicom was down 5.69 per cent to HK$7.45.