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Rating Action:

Moody's assigns A2/Aaa.mx ratings to America Movil's proposed MXN3.5 billion add-on

 The document has been translated in other languages

12 Nov 2015

Mexico, November 12, 2015 -- Moody's de Mexico, (Moody's) assigns A2/Aaa.mx ratings to the proposed add-ons for America Movil S.A.B. de C.V.'s MXN 3.5 billion in senior unsecured Eurobond securities due in 2019 and 2024. The add-ons will take place under the program launched in November 2012. Proceeds from the notes will be used for general corporate purposes. The outlook on the ratings is stable.

RATINGS RATIONALE

America Movil 's ratings are supported by the company's leading position in terms of scale among global telecom operators and its strong presence in Latin America, combined with market shares of approximately 69% and 63% of all wireless and fixed line subscribers in Mexico, respectively, as determined by the country's regulator (IFT). The rating also reflects stable cash flow generation and a multi-regional revenue base supported by extensive and modern infrastructure to support competitive positions. In addition, the rating benefits from America Movil's relatively conservative financial policies. At the same time, the ratings also factor in profitability pressured by factors such as intense competition, uncertainty surrounding regulatory changes in key markets and risks associated with growth strategy involving expansion into new markets, such as Europe.

In November 2012, America Movil launched a 5 year MXN 100 billion global Mexican Peso program. Since then, the company has issued MXN 43.5 billion through an original 10 year issuance and five re-openings. We expect the company to continue to reopen the notes on a quarterly basis and to use part of the proceeds to refinance debt. The program should also help the company to increase Mexican peso debt representation in its overall capital structure, improving the currency match between debt and cash generation. As of September 2015, about 34% of total debt was denominated in Euros, followed by another 30% in US dollars and 14% in Mexican pesos.

The proposed add-on will be issued without the guarantee of Radiomovil Dipsa, S.A. de C.V., a Mexican mobile operator and one of America Movil's largest subsidiaries, which has provided guarantees to America Movil's previously-issued unsecured notes. Since October 2011, America Movil has been issuing senior unsecured bonds without the guarantee from Radiomovil - Dipsa, S.A. de C.V. (brand name "Telcel", unrated. Despite the structural subordination of the unguaranteed notes to the guaranteed ones, Moody's has not notched the unguaranteed notes rating 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.

In addition, we expect that the company will not materially increase the current level of debt at its subsidiaries, which would further subordinate the debt at the holding company. As of September 30, 2015 about 19% of America Movil's consolidated debt was directly owed by its subsidiaries and close to 2.6% was owed by Telmex de Mexico, S.A.B. de C.V. ("Telmex", A3 stable).

The stable outlook on America Movil's ratings is based on our expectation that the company will be able to maintain its credit quality by posting positive revenue growth and sustaining its margins at current levels, despite increasing competitive challenges across Latin America.

An upgrade of America Movil's ratings is not envisioned at this point, mainly due to our expectations that margins and free cash flow will remain pressured at least for the next couple of years. Any future upgrade consideration will be dependent on the company continuing to improve its operating margins and free cash flow generation and maintaining a conservative financial policy. An upgrade would likely have to be coupled by an overall improvement in the sovereign ratings of the major countries of operation for America Movil.

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 exceed 2.0 times for an extended period of time. A material deterioration in the company's liquidity would also put pressure on the ratings.

We use the Global Telecommunications Industry Methodology to assist in the assessment of America Movil's credit quality. The Methodology suggested rating outcome for America Movil is based on the company's last twelve months results as of September 2015. All financial metrics incorporate our standard adjustments. Application of this Methodology indicates a global rating of A3 for America Movil, but expected to recover to the A2 level in 12 to 18 months, which is in line with the company's current rating.

America Movil, headquartered in Mexico City, Mexico, is Latin America's leading telecom operator with over 368 million accesses, of which 288 million were mobile subscribers as of September 2015. The company offers wireless, fixed and pay TV services to 18 countries in the Americas and various European nations through a controlling stake in the Telekom Austria group. In the last twelve months ended September 2015, America Movil reported revenues of close to USD60 billion.

The principal methodology used in these ratings was Global Telecommunications Industry published in December 2010. Please see the Credit Policy page on www.moodys.com.mx for a copy of this methodology.

The period of time covered in the financial information used to determine America Movil S.A.B. de C.V.'s rating is between 01/01/2011 and 09/30/2015 (source: Audited Financial Statements).

Moody's National Scale Credit 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 credit 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 ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in June 2014 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

REGULATORY DISCLOSURES

Information sources used to prepare the rating are the following: parties involved in the ratings, public information and confidential and proprietary Moody's information.

The ratings have been disclosed to the rated entity prior to public dissemination.

A general listing of the sources of information used in the rating process, and the structure and voting process for the rating committees responsible for the assignment and monitoring of ratings can be found in the Disclosure tab in www.moodys.com.mx.

The date of the last Credit Rating Action was 10/09/2015.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.mx.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

In compliance with regulatory requirements, Moody's de México has been informed by America Movil S.A.B. de C.V. that during the two-month period prior to the date hereof, Fitch Ratings had assigned a rating of "Aaa(mex)" on the same securities referred to in this press release.

This Rating is subject to upgrade or downgrade based on future changes in the financial condition of the Issuer/Security, and said modifications will be made without Moody's de México S.A. de C.V accepting any liability as a result.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on www.moodys.com.mx for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com.mx for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see our website www.moodys.com.mx for further information.

Please see www.moodys.com.mx for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

The ratings issued by Moody's de Mexico are opinions regarding the credit quality of securities and/or their issuers and not a recommendation to invest in any such security and/or issuer.

Please see the ratings tab on the issuer/entity page on www.moodys.com.mx for additional regulatory disclosures for each credit rating.

Gabriel Vigueras
Vice President - Senior Analyst
Corporate Finance Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700

Marianna Waltz, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

Releasing Office:
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700

Moody's assigns A2/Aaa.mx ratings to America Movil's proposed MXN3.5 billion add-on
No Related Data.
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