Moody's lifts Axtel outlook to stable

Moody's Investors Service said it confirmed Axtel, SAB de CV's Ba3 corporate family rating and changed the rating outlook to stable following the company's $515 million debt-financed acquisition of Avantel.

The acquisition of Avantel triggered a significant increase in Axtel's debt, with the negative impact on credit metrics characterized by an adjusted debt-to-EBITDA ratio of 2.4x post acquisition for 2007. In addition, EBITDA margins for new Axtel will fall amid the incorporation of Avantel.

However, the agency said the Ba3 rating confirmation was based on the continued strength of Axtel's legacy business and Moody's positive perception of the acquisition because it increased Axtel's scale and market presence, widened the company's product base and improved the composition of the customer base.

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