Moody's downgrades Telmex

Moody's Investors Service said it downgraded Telefonos de Mexico, SAB de CV's global local-currency issuer rating to A3 and affirmed its A3 global foreign-currency issuer rating and Aaa.mx national scale rating.

The outlook remains stable.

The downgrade was prompted by Moody's view that the negative impact on Telmex's revenues and margins derived from strong competitive pressures will continue, aggravated by an increasing adverse regulatory environment that elevates the company's business risk.

The ratings are supported by the company's strong telecom market position in Mexico, solid technology position and strong credit metrics for its rating category, the agency said.

The stable outlook reflects Moody's expectations that despite the downward pressure on its business, Telmex should be able to moderate its cost and expenditures and continue to generate healthy cash flow levels.

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