Fitch: America Movil, Telmex to negative

Fitch Ratings said it affirmed America Movil, SAB de CV's and Telefonos de Mexico, SAB de CV's (Telmex) local and foreign currency long-term issuer default ratings and senior unsecured notes at A.

The agency also affirmed America Movil’s and Telmex Internacional SAB de CV y Subsidiarias' national scale ratings at AAA(mex).

The outlook on the issuer default ratings was revised to negative from stable.

Fitch said the outlook revision reflects America Movil’s continued EBITDA erosion, caused by increasing competitive pressures in its key Mexico market, and resultant financial profile deterioration that is not deemed in line with its A rating level.

While any material EBITDA recovery would prove challenging in the short- to medium-term due to a tough operational outlook, the company's commitment to free cash flow (FCF) turnaround and leverage improvement with measured shareholder distributions amid lower capex requirement will be critical for a future rating action, the agency added.

Ratings will be downgraded in case of a lack of indication for its net leverage to recover to below 2 times over the medium- to long-term.

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