S&P rates new Axtel notes B

Standard & Poor's said it assigned its B local and foreign currency corporate credit rating to Monterrey, Nuevo León-based telecommunications service provider Axtel SA de CV and its B rating to Axtel's proposed $150 million 144A senior unsecured notes issue maturing in 2013.

The outlook is stable.

"The ratings reflect Axtel's business risk due to strong competition from Mexico's telecommunications incumbent, Teléfonos de México SA de CV - Telmex (local currency: BBB+/positive/--), its short operating history, and its wireless local loop model, for which longer-term viability has yet to be proven," said S&P credit analyst Manuel Guerena.

S&P said tempering factors include the company's complete telecommunications products portfolio, its technologically advanced network and services, its improved financial profile and capital structure due to a debt renegotiation completed earlier this year, and its experienced management team and equity partners.

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