Sao Paulo, November 22, 2012 -- Moody's de México assigned A2 global foreign currency and Aaa.mx national scale ratings to America Movil's proposed issuance of up to MXN 20billion in debt securities ("títulos de crédito extranjeros"). The notes are senior unsecured debt obligations of America Movil and are due in 10 years. Proceeds from the notes will be used for corporate purposes, including debt refinancing. The outlook on the ratings is stable.
Please see ratings tab on the issuer/entity page on moodys.com for information on Global Scale Rating.
The date of the last Credit Rating Action was August 8, 2012.
For a more detailed analysis of the credit profile for America Movil, please refer to our last credit opinion of May, 18th 2012.
America Movil's ratings are supported by the company' s status as Mexico's largest telecom operator with market shares of approximately 70% on wireless and 80% on wireline subscriber bases; its # 1 position as regional mobile telecom service provider in Latin America; its # 10 position in the global telecom universe in terms of revenues; its strong operating cash flow of about USD 15 billion in LTM ended in September 2012; and solid credit metrics. "America Movil continues to exhibit strong credit metrics: in the last twelve months ended in September 30, 2012, its posted strong annual operating cash flow of about USD 15 billion, equivalent to 41.4% of adjusted debt, and a moderate leverage of 1.7 times adjusted debt/EBITDA for its rating category", said Soummo Mukherjee, a Vice-President, Senior Credit Officer at Moody's.
Once again, and in line with the new financial policies of America Movil, the proposed debt instruments will be issued without the guarantee of Radiomóvil Dipsa, S.A. de C.V., a Mexican mobile operator and America Movil's largest subsidiary, which has provided guarantees to America Movil's previously-issued unsecured notes. Since October 21, 2011, America Movil has been issuing senior notes without this guarantee. Despite the effective subordination of the unguaranteed notes, Moody's has not notched the respective ratings below the existing A2 senior unsecured rating due to overall strength of America Movil and the expectation that going forward all debt issued by the group will no longer carry a guarantee. The decision was also based on the assumption that America Movil will not materially increase the current level of debt at its subsidiaries, which would further subordinate the debt at the holding company, America Movil. We estimate that, as of September 30, 2012, about 17% of America Movil's consolidated debt was directly owed by its subsidiaries and that close to 11% was owed by Teléfonos de Mexico, S.A.B. de C.V. ("Telmex", A3 stable). We expect that upcoming maturities of this subsidiary's debt instruments will continue to be refinanced by debt issuances at the parent.
The stable outlook on America Movil's ratings is based on Moody's expectation that the company will be able to maintain its credit quality by posting positive revenue growth and sustaining its margins, despite increasing competitive challenges across Latin America. The stable outlook also considers an expected reduction in leverage to closer to one time adjusted debt/EBITDA over the next 12 months.
An upgrade of America Movil's ratings is not envisioned at this point. Any future upgrade consideration will be dependent on the company continuing to improve its operating margins and free cash flow generation, maintaining a conservative financial policy and putting in place an appropriate backstop credit facility for its commercial paper programs. An upgrade would also consider any possible impact that a major acquisition could have on the financial and business profile of the company.
The ratings could be negatively impacted if the company's operations or financial performance is adversely affected due to intensifying competition; if a change in regulation impacts the company's operations; or if America Movil makes large debt-funded acquisitions or significant returns of capital to shareholders such that adjusted gross debt to EBITDA is likely to remain above 1.5 times for an extended period of time. A material deterioration in the company's liquidity would also put pressure on the ratings.
The principal methodology used in rating America Movil, S.A.B. de C.V. was the Global Telecommunications Industry Methodology published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
America Movil, headquartered in Mexico City, Mexico, is Latin America's leading telecom operator with over 319 million accesses, of which over 256 million were mobile subscribers as of September 2012. It offers wireless, fixed and pay TV services in many countries in the region. It provides at least wireless services in 18 countries in the Americas, including Mexico, Brazil, Colombia, Argentina, Chile and the U.S. In the last twelve months ended in September 30, 2012, America Movil reported revenues of close to USD 56 billion, with an adjusted EBITDA of over USD 21 billion.
Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in October 2012 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".
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Soummo Mukherjee VP - Senior Credit Officer Corporate Finance Group Moody's America Latina Ltda. Avenida Nacoes Unidas, 12.551 16th Floor, Room 1601Sao Paulo, SP 04578-903 Brazil JOURNALISTS: 800-891-2518 SUBSCRIBERS: 55-11-3043-7300Brian Oak MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's America Latina Ltda. Avenida Nacoes Unidas, 12.551 16th Floor, Room 1601Sao Paulo, SP 04578-903 Brazil JOURNALISTS: 800-891-2518 SUBSCRIBERS: 55-11-3043-7300(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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