€d_artsel schreef op 23 september 2013 19:58:
press release
Sept. 23, 2013, 1:14 p.m. EDT
Fitch Rates America Movil's MXN15B Proposed Issuance 'A' and 'AAA(mex)'
MONTERREY, Mexico & NEW YORK, Sep 23, 2013 (BUSINESS WIRE) -- Fitch Ratings has assigned an international scale rating of 'A' and a national scale rating of 'AAA(mex)' to America Movil, S.A.B. de C.V.'s (AMX; America Movil) MXN15 billion senior notes due 2018. Proceeds from the issuance are expected to be used for general corporate purposes including debt repayment.
KEY RATING DRIVERS
The ratings reflect Fitch's view that net leverage will remain within the company's long-term objectives and should end 2014 below 1.5x. There is still uncertainty about the final outcome of AMX's tender offer for Royal KPN N.V. (KPN, 'BBB-', Stable Outlook), especially after the announcement by the Foundation that it would issue preferred shares that could potentially block AMX's tender offer. Assuming KPN is ultimately acquired by AMX and the sale of E-plus is successful, Fitch expects that the tender offer will be funded in a manner that will result in pro forma net debt-to-EBITDA approaching 1.5x. Fitch believes leverage ratios should not materially change under the different scenarios.
In Fitch's opinion, if AMX eventually succeeds in acquiring 100% of KPN and if the transfer of E-plus to Telefonica Deutschland for a 20.5% stake in that company plus EUR5 billion does not get the necessary regulatory approvals, pro forma leverage should be higher than 1.5x but should follow the same declining trend noted above. Fitch notes that in the case that KPN's tender offer is not successful, the proceeds from the hybrid issuance will be used to pay senior debt, resulting in lower leverage ratios given the equity credit of the hybrid securities.
NET LEVERAGE EXPECTATION BELOW 1.5x BY 2014:
Fitch incorporates in its ratings AMX's firm commitment to reduce net debt-to-EBITDA to below 1.5x by the end of 2014. Failure to achieve this would pressure the ratings and is likely to result in a one-notch downgrade. The entrance of new telecommunications law in Mexico and KPN's operating performance if the acquisition succeeds could pressure cash flow generation, hindering AMX's ability to reduce leverage. Fitch expects AMX to keep financial discipline with respect to uses of cash flow until leverage decreases.
AMX's ratings consider its diversified fixed and wireless operations across Latin America, multiple service platforms, large scale, strong free cash flow, ample financial flexibility, solid liquidity and sound financial profile. The ratings also take into account Fitch's expectation that management will maintain a relatively conservative financial profile over the long term. A strong competitive environment underpinned by increasing regulation in Mexico and Colombia as well as declining prices in voice services temper the ratings.
In Fitch's view, if the KPN acquisition is successful it will improve AMX's diversification of cash flows, currency, and political and regulatory risks among others. On a pro forma basis assuming KPN (excluding E-plus) is consolidated into AMX for the 12 months ended June 30, 2013 the biggest contributors to EBITDA generation should be Mexico with 39%, Netherlands 17%, Brasil 15% and Colombia 11%. While this should be positive to diversification, Fitch is concerned with future development of the Mexican and Dutch operations. However, Fitch notes that recent positive trends in Brasil could temper weak results in Mexico and the Netherlands somewhat if they occur.
REGULATORY PRESSURES IN MEXICO
The upcoming telecommunications law in Mexico is expected to be enforced during this year once the secondary laws are passed by congress. While the final outcome and effects on AMX are still uncertain, Fitch will expect the outcome of the secondary laws to put some pressure on Mexican operating results. Regulatory issues in Colombia are expected to have a slight negative impact on America Movil's operating results. Impact on Colombian operating results should be minimal due to the recent enforcement of asymmetric rates as interconnection revenues are low. In addition, the exclusion from the AWS band auction and allowing AMX to participate only in the 2.5Ghz band should have a minimal effect on capex given the actual tower coverage in Colombia.
Historically AMX has maintained a strong liquidity position. As of June 30, 2013, cash balances reached MXN31.6 billion and the company has unused committed credit facilities for USD4.1 billion (equivalent to approximately MXN52 billion) on top of cash from operations (CFO) over the past 12 months of MXN147 billion. This adequately compares with maturities for the next three years of MXN106.8 billion. In addition, the company's access to capital markets and extended maturity profile adds to financial flexibility.
Free cash flow from AMX existing operations is expected to remain solid over the medium term, underpinned by stable capital expenditures in the next few years of approximately USD10 billion. Fitch believes cash flow from operations will be used to maintain a conservative capital structure and to return excess cash flow, in the absence of acquisitions, to shareholders in the form of dividends or share buybacks.
For the 12 months ended June 30, 2013, America Movil's total debt-to-EBITDA was 1.8x, while net debt-to-EBITDA was approximately 1.7x. For this same period, total debt amounted to MXN459 billion (USD34.8 billion), of which 91% is issued in the international and domestic capital markets and approximately 90% has a fixed rate. America Movil's currency risk exposure strategy is to have a net currency exposure to match the majority of its cash flow.