Mexico, December 15, 2016 -- Moody's de Mexico ("Moody's") placed America Movil, S.A.B.
de C.V. ("America Movil")'s long term A2/Aaa.mx
ratings on review for possible downgrade. Moody's also placed Telefonos
de Mexico, S.A.B. de C.V. ("Telmex")'s
long term A3/Aaa.mx ratings on review for downgrade. These
actions follow the rating actions taken by Moody's Investors Service on
December 15, 2016, placing the global scale ratings of both
America Movil and Telmex on review for downgrade.
On Review for Downgrade:
..Issuer: America Movil, S.A.B.
de C.V.
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently A2
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aaa.mx
..Issuer: Telefonos de Mexico, S.A.B.
de C.V.
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently A3
....Senior Unsecured Regular Bond/Debenture,
Placed on Review for Downgrade, currently Aaa.mx
America Movil, S.A.B. de C.V.
(600059728)
Long-Term Debt Rating Senior Unsecured: A2
CERTIFICADOS BURSATILES due 2017 AMX 07-3
CERTIFICADOS BURSATILES due 2018 AMX 08
EUROBONDS due 2019 AMX 0619
CERTIFICADOS BURSATILES due 2020 AMX 10-2
SR NOTES due 2022 AMX 1122
EUROBONDS due 2024 AMX 0624
CERTIFICADOS BURSATILES due 2025 AMX 10U
Mexico Long Term National Scale Senior Unsecured: Aaa.mx
CERTIFICADOS BURSATILES due 2017 AMX 07-3
CERTIFICADOS BURSATILES due 2018 AMX 08
EUROBONDS due 2019 AMX 0619
CERTIFICADOS BURSATILES due 2020 AMX 10-2
SR NOTES due 2022 AMX 1122
EUROBONDS due 2024 AMX 0624
CERTIFICADOS BURSATILES due 2025 AMX 10U
Telefonos de Mexico, S.A.B. de C.V.
(21400)
Long-Term Debt Rating Senior Unsecured: A3
CERTIFICADOS BURSATILES due 2018 TELMEX 08
CERTIFICADOS BURSATILES due 2037 TELMEX 07
Mexico Long Term National Scale Senior Unsecured: Aaa.mx
CERTIFICADOS BURSATILES due 2018 TELMEX 08
CERTIFICADOS BURSATILES due 2037 TELMEX 07
RATING RATIONALE
The rating actions were based on America Movil's weak credit metrics
for its current rating category and Moody's view of limited prospects
of a prompt turnaround given competitive pressures and economic challenges
across Latin America in the next 12 to 18 months, which will affect
its operating results. Despite America Movil's recent efforts
towards reducing its debt amount, strong competitive pressures have
negatively affected the company's operating metrics across its main
markets in Latin America, especially in Mexico, where it generates
close to 25% of its EBITDA. In Moody's view,
in addition to competitive challenges, prospects of weaker economic
growth in the region will affect America Movil's cash generation
and delay significant deleveraging beyond the next three years.
Telmex's credit metrics have also been affected by market trends
towards higher data usage vis-a-vis voice services;
high competitive pressure from cable companies; regulatory changes
towards increasing competition; and high capital expenditures to
help protect its subscriber base. Although Telmex's financial
debt is low and its cash-related credit metrics could improve somewhat
from 2017 on due to lower capital expenditures in comparison to 2016,
its financial position will remain pressured given a large pension liability
and low free cash flow generation.
During the ratings review period, Moody's will focus its analysis
on both companies' operating and financial strategies that could
accelerate deleveraging in a realistic and sustained fashion.
America Movil, headquartered in Mexico City, Mexico,
is Latin America's leading telecom operator with over 366 million accesses,
of which 284 million were mobile subscribers as of September 2016.
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
2016, America Movil reported revenues of close to USD 52.3
billion.
Telmex, headquartered in Mexico City, is 99% owned
by America Movil. Telmex provides voice and broadband access services
under a national concession and network coverage in Mexico, with
over 60% subscriber market share. During LTM ended in September
2016, the company's revenues reached USD 5.5 billion.
The principal methodology used in these ratings was Global Telecommunications
Industry, published in December 2010. Please see the Rating
Methodologies 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
and Telefonos de Mexico, S.A.B. de C.V.'s
ratings is between 12/31/2011 and 9/30/2016 (source: audited financial
statements and regulatory filings).
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 May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be inferred from
the GSR to which it maps back at that particular point in time.
For information on the historical default rates associated with different
global scale rating categories over different investment horizons,
please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_189530.
REGULATORY DISCLOSURES
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's information.
The ratings have been disclosed to the rated entities 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 for America Movil, S.A.B.
de C.V. was 10/06/2016.
The date of the last Credit Rating Action for Telefonos de Mexico,
S.A.B. de C.V. was 01/04/2016.
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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
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.
Nymia C. Almeida
VP - Senior Credit Officer
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
