Moody's rates Millicom notes B3

Moody's Investors Service assigned a provisional B3 rating to the proposed $550 million notes of Millicom International Cellular S.A. The outlook for all ratings remains stable.

Proceeds from the proposed notes are expected to be used to refinance the company's existing $136 million of 11% senior notes and $395 million of 13.5% senior subordinated obligations and provide for general corporate needs.

Since Moody's recent upgrade of Millicom's ratings on Aug. 26 (following the significant debt reductions resulting from the company's recapitalization), the company has continued to demonstrate solid operational and financial growth. For the quarter ending Sept. 30, the company reported a 29% year-over-year increase in proportional subscribers (excluding El Salvador which was recently reconsolidated). Over the same period, revenue and EBITDA increased by about 14% and 31%, respectively (both figures also exclude El Salvador).

The company also exceeded its previous guidance of $100 million to be upstreamed from subsidiaries during 2003 with $114 million upstreamed through Oct. 30.

While operational and financial trends remain positive, Moody's cautioned that the majority of cash received from subsidiaries continues to be concentrated from a few countries with high broad-based country risks (with a particularly high concentration from Vietnam and, to a lesser extent, Paraguay).

Furthermore, Moody's noted that the ability of Millicom to upstream cash is dependant on a number of factors, including the ongoing financial performance and funding needs of the company's different subsidiaries, approvals of other shareholders, and potential sovereign limitations.

Positively, the ratings continue to reflect the strong cash flow generation of Millicom's businesses and a relatively modest level of consolidated debt (relative to consolidated operating cash flow); the geographic diversification of Millicom's subsidiaries, which somewhat reduces the company's exposure to the country risks of an individual country; the company's high subscriber revenue, and operating cash flow growth rates and continued strong growth prospects resulting from the generally low penetrations rates and resultant strong growth prospects for the mobile markets where Millicom operates.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.