Fitch: Outlook Stable for Latin America Telecom & Media Industry in 2012

MONTERREY, Mexico--(BUSINESS WIRE)--The rating outlook for Latin American telecom and media companies is stable for 2012, reflecting the industry's solid balances sheets and integration of services, according to Fitch Ratings.

Fitch believes convergence should enter a new phase in the next few years, with emphasis on video services equipped with data enabled devices, which can affect pay-TV providers' business models. Full service providers should have a better competitive position.

Aggregate demand for telecommunications services in Latin America should soften and affect revenue growth in 2012 due to lower GDP growth versus 2011. Pre-dividend free cash flow should remain strong for investment-grade operators and null for non-investment-grade issuers as they invest their cash from operations. Fitch estimates the aggregate FCF margin in the 8%-10% range.

Fitch estimates its rated issuers will maintain an aggregate historical leverage ratio of 1.6 times (x) for adjusted gross debt to operating EBITDAR and 1.2x for net adjusted gross debt to operating EBITDAR over the long term. Pay-TV providers and alternative network operators (Altnet) could experience pressure on leverage due to the level of investments or from poor results due to competitive pressures without materially changing the aggregate level for the sample.

Debt-funded acquisitions of a significant scale should pressure credit quality and could result in a negative change in the rating outlook for some issuers.

A deteriorating operating environment along with liquidity issues related to refinancing or leverage pressure due to foreign exchange exposure should trigger a change in some altnets.

The full '2012 Outlook: Telecom & Media' is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Latam 2012 Telecom & Media Outlook

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=665833

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