Oct. 9, 2009 (Business Wire) -- Fitch Ratings has assigned an 'A-' rating to America Movil's, S.A.B. de C.V.'s (America Movil) US$750 million 5% senior notes due 2019 guaranteed by its Mexican subsidiary Radiomovil Dipsa, S.A. de C.V. Proceeds from the issuance are expected to be used for general corporate uses.
America Movil's ratings are supported by the company's diversified wireless operations across Latin America where it has leading market positions, its strong free cash flow, as well as its sound financial and liquidity profile. The ratings incorporate the expectation that management will maintain a relatively conservative credit profile over the long term. Concerns relate to the outcome of investigations of market power, particularly with interconnection rates in Mexico and Colombia, that could result in additional regulation being applied to America Movil in those countries and proposed tax increases in Mexico in the form of special taxes for the telecommunications industry and poverty taxes. Nevertheless, the ratings incorporate Fitch's views that negative outcomes are likely to be manageable given the company's diversification and financial profile.
In Fitch's opinion, a geographically diversified portfolio of assets lowers business risk and cash flow volatility. America Movil's credit ratings are underpinned by its Mexican wireless unit, Telcel, which accounted for 51% of EBITDA generation for the 12 months ended June 30, 2009. Fitch estimates Telcel to have 72% of the mobile users in Mexico. The company's diverse revenue stream, generated by wireless businesses outside Mexico and to a lesser extent fixed line businesses, provides the company with growing cash flow and currency diversification. For the first six months of 2009, the company's non-Mexican subsidiaries accounted for 64% of consolidated revenues and 50% of EBITDA.
America Movil has a sound financial profile, and credit metrics are expected to remain within with the company's long-term target of net debt-to-EBITDA of 1.0 times (x). For the last 12 months ended June 30, 2009, leverage ratio of funds flow from operations (FFO) to adjusted leverage was 1.3x and total debt to EBITDA was 0.8x. For that same period coverage ratios of FFO interest coverage and EBITDA gross interest expense stood at 13.7x and 17.6x, respectively. Excluding EBITDA from the Mexican operation for the first six months of 2009, the EBITDA generation from the other subsidiaries is sufficient to meet America Movil's consolidated interest expense by 6.3x.
The company's liquidity is strong, with cash balances as of June 30, 2009 of approximately US$1.5 billion, undrawn committed facilities of US$2 billion for general corporate uses and US$2.75 billion for capital expenditures.
