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Moody's ups America Movil
Moody's Investor Service said it upgraded America Movil SA de CV's senior unsecured notes to A3 from Baa1, with stable outlook. This rating action was prompted by the upgrade of Mexico's foreign currency country ceiling to Baa1 with stable outlook.
The following debt ratings were affected: $800 million of guaranteed senior unsecured notes due 2014; $500 million of guaranteed senior unsecured notes due 2015; $500 million of guaranteed senior unsecured notes due 2009; and $300 million of guaranteed floating-rate notes due 2007, all rated A3.
According to Moody's, America Movil's ratings reflect its status as Mexico's largest wireless operator. Credit strengths include: national coverage, an extensive distribution network, a favorable competitive environment, growth opportunities in the Latin American wireless market, high free cash flow generation which is driven mainly by the Mexican operations, the company's low financial risk with low leverage, high liquidity, positive free cash flow generation, and a comfortable maturity profile.
Moody's said the ratings are constrained by a number of factors including: low cash flows of the Brazilian operations due to higher subscriber acquisition costs and the development of "green field" territories, the company's acquisition strategy, the fact that the wireless telephone business is capital intensive due to the need for continuous technology-driven improvements, high churn levels of the Latin American wireless industry reflecting a reliance on prepaid customers, and, currency mismatch as most of America Movil's sales are denominated in local currency while around 60% of its debt is in foreign currency.
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