Fitch 10 Most Distressed LatAm Corporates: TV Azteca's Cash Burn May Fuel Downgrade

CHICAGO--()--A difficult path to free cash flow generation for TV Azteca S.A.B. de C.V. (TV Azteca) caused by increased production costs and muted revenue growth sets the company up for a potential downgrade, according to the latest report in Fitch's 10 report series 10 Most Distressed LatAm Corporates.

One report will be released each day through Feb. 12th per the schedule found at the bottom of this release.

"TV Azteca needs to rein its cash burn to prevent a further ratings downgrade," said Alvin Lim, Director. "Failure to turn around negative free cash flow generation amid sluggish EBITDA growth, resulting in a vulnerable liquidity profile over the medium term, will pressure ratings."

TV Azteca will need at least MXN3.3 billion of EBITDA in 2016 to generate positive free cash flow. Fitch does not expect the company to meet the target as drastic cuts in production costs are unlikely, given the importance of competitive content. Also, Fitch does not forecast substantial increases in advertising prices during 2016 given the unfavorable operational outlook while continued EBITDA loss in the company's Colombian telecom operation is expected in 2016.

Fitch's 10 Most Distressed LatAm Corporates series will be released one report per day as follows:

Feb. 1st: Samarco Mineracao S.A.

Feb. 2nd: Companhia Siderurgica Nacional

Feb. 3rd: Pacific Exploration and Production Corporation

Feb. 4th: GOL Linhas Aeresas S.A.

Feb. 5th: Oi S.A.

Feb. 8th: GeoPark Latin America Limited Agencia en Chile

Feb. 9th: Ajecorp B.V.

Feb. 10th: TV Azteca, S.A.B. de C.V.

Feb. 11th: QGOG Constellation S.A.

Feb. 12th: Odebrecht Offshore Drilling Finance Ltd.

For more information, a special report titled "TV Azteca - Scenario Analysis" is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at www.fitchratings.com

TV Azteca -- Scenario Analysis (Signals Indicate Cash Flow Gap)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877601

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Contacts

Fitch Ratings, Inc.
Primary Analyst
Alvin Lim, CFA
Director
+1-312-368-3114
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Velia Valdes
Analyst
+52-81-8399-9100
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings, Inc.
Primary Analyst
Alvin Lim, CFA
Director
+1-312-368-3114
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Velia Valdes
Analyst
+52-81-8399-9100
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com