Moody’s changes Entel view to negative

Moody’s Investors Service said it changed the outlook for Empresa Nacional de Telecomunicaciones SA (Entel) to negative from stable and affirmed its Baa3 issuer rating and the Baa3 ratings on its senior unsecured global notes due 2024 and 2026.

“The change in outlook to negative from stable reflects the expected high execution risk for Entel over the rating horizon. This risk is due to the challenging macroeconomic environment in Chile and Peru, and the significant capital expenditure required by the planned 4G network expansion, 5G network deployment and penetration into the home segment in both markets –– which constitute Entel's primary avenues for growth. Even with economic improvements, both countries continue to exhibit sluggish growth and persistent inflation, factors that could potentially hinder organic growth in both the mobile and home sectors,” Moody’s said in a statement.

The weaker outlook also mirrors the company’s strategic shift towards an asset-light model. “In Moody's view, this change reduces the company's financial flexibility compared to competitors who maintain ownership of their revenue-generating assets, despite the possible positive impact on operational efficiency and capex intensity,” the agency added.

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