S&P affirms America Movil, Telefonos de Mexico

Standard & Poor's said it affirmed the A- global scale long-term ratings on America Movil SAB de CV and Telefonos de Mexico SAB de CV.

The outlook is stable.

The affirmation follows America Movil's plans for a tender offer for 40.04% of the outstanding shares of Telmex for Ps. 75.8 billion, according to the agency.

"We expect the company to maintain its modest financial risk profile despite the resources it used for the acquisition of Telmex's shares, which AMX will finance either with cash on hand, debt or the combination of both," S&P analyst Marcela Duenas said in a statement.

The company's exceptional liquidity provides enough flexibility for such and receives support from its strong free operating cash flow generation, which is expected to exceed the transaction cost, the agency said.

If the deal is financed entirely with debt, America Movil's adjusted consolidated total debt to EBITDA could rise to 1.7x.

Ratings reflect America Movil's strong business risk profile with a leading position in the Latin America telecommunications industry, its solid profitability, high competitive position and expectation that the company will maintain its robust cash flow generation despite intense competition in some markets, the agency noted.

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