S&P keeps Telemig, Amazonia on positive watch

Standard & Poor's said its BB- long-term corporate credit rating on Telemig Celular SA and its B+ long-term corporate credit rating on Amazonia Celular SA remain on CreditWatch with positive implications, where they were placed on Aug. 6, 2007. The B+ rating on the $120 million notes co-issued by Amazonia and Telemig also remains on CreditWatch with positive implications.

The initial CreditWatch placement followed Vivo Participacoes SA's announcement that it would acquire Telepart Participacoes SA's 53.9% voting shares in Telemig Participacoes SA, which controls Telemig, and Telepart's 51.86% voting shares of Tele Norte Celular Participacoes SA, which controls Amazonia, with a cash disbursement of $630 million after regulator's approval.

Because Vivo already provides mobile services in Amazônia's concession area, the company was required by regulation to sell the stake in Amazônia. As a result, on Dec. 20, Vivo announced it reached an agreement to sell its stake in Amazônia to Telemar Norte Leste for $67 million.

The agency said that as long as the transactions are concluded, the ratings on Telemig could be raised up to BB, while the ratings on Amazônia could be raised up to BB+, because Telemig would benefit from being part of Brazil's market leader in the mobile segment, with larger geographical diversification and financial flexibility, and Amazônia would benefit from being part of Brazil's largest telecom group, the market leader in the fixed-line segment and the fourth player in the mobile segment.

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