Moody's affirms Telefónica Finanzas Mexico

Moody's Investors Service said it affirmed the Aaa.mx national scale rating assigned to Telefónica Finanzas Mexico SA de CV's certificados bursatiles. The outlook is stable.

The affirmation follows parent company Telefónica SA's announcement of the successful bidding process to acquire from the government a controlling stake of 50% plus 1 share in Colombia-based Colombia Telecomunicaciones SA ESP. As a result, Telefónica Group will make a cash payment into the company of the equivalent to €300 million plus the assumption of the equivalent of some €2 billion in liabilities at Colombia Telecomunicaciones. In addition, the government holds a put option to Telefónica at market value for the additional 50% equity stake.

Moody's said the affirmations take into consideration that the cash transaction and liability assumption will not substantially impair Telefónica's ability to restore financial strength as part of the deleveraging plan after the recent acquisition of U.K. mobile telecoms network operator O2 and that the new acquisition will be fully funded from the cash proceeds from the recent disposal of a 6.6% equity stake in Sogecable for €325 million.

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