S&P affirms Tele Norte, rates Brasil Telecom BBB-

Standard & Poor's said it affirmed the BBB- global scale corporate credit ratings on Tele Norte Leste Participacoes SA and Telemar Norte Leste SA.

The agency also said it assigned the same BBB- rating to Brasil Telecom SA, which currently is a full subsidiary of Telemar Norte Leste. But upon conclusion of the corporate restructuring, it should become the operating holding company of the group, S&P said.

Given the interdependencies and financial integration of the companies, the agency said it analyzes them based on the consolidated financials of Tele Norte Leste as one economic group called Telemar.

S&P also affirmed the group's brAAA national scale ratings.

The outlook is stable.

The ratings reflect the group's dominant market position in the telecom industry in Brazil, with revenue diversification among wireline, wireless and broadband, S&P said.

The industry suffers from high competition, especially with the traffic trend moving from fixed-line to mobile, the agency said. This could result in lower operating profits, even with growth in subscribers and minutes of usage, S&P added.

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