EU and US could reach trade deal this weekend - Reuters
Investing.com -- Fitch Ratings has affirmed America Móvil’s (BMV:AMXL) Long-Term Foreign and Local Currency Issuer Default Ratings at ’A-’ while revising the outlook to stable from positive.
The rating agency announced Tuesday that it also affirmed the telecom company’s long-term debt, National Scale Short-Term rating, and local short-term debt at ’F1+(mex)’. The National Scale Outlook remains stable.
According to Fitch, the outlook revision reflects expectations that America Móvil’s net leverage will remain above 1.5x and CFO-capex to debt below 17.5% in the medium term, which aligns with the ’A-’ rating level. The agency also cited stable market dynamics and operating conditions that are not expected to materially affect the company’s credit profile.
For the last twelve months ended March 31, 2025, America Móvil’s net debt to EBITDA ratio was 1.8x while its CFO-capex to debt stood at 6.3%. Fitch expects these indicators to improve over the next few years, with net leverage trending toward 1.5x and CFO-capex to debt remaining in the low to mid-teens.
The ratings reflect America Móvil’s position as Latin America’s largest wireless service provider with well-established multiple-service platforms and network infrastructure. The company maintains leading positions in mobile and fixed operations throughout Latin America, as well as in Austria and Eastern Europe.
Approximately 85% of America Móvil’s EBITDA comes from countries with Operating Environments below A-, which limits the company’s ratings. Despite this limitation, the company’s geographic diversification is considered superior to investment-grade U.S. peers like Verizon Communications (NYSE:VZ) and Comcast (NASDAQ:CMCSA).
Fitch projects America Móvil’s cash flow from operations to average around MXN218 billion between 2025 and 2027, fully covering the annual capital expenditure budget. This strong cash flow would enable the company to reduce debt while maintaining approximately MXN50 billion in shareholder returns through dividends or share buybacks.
The rating agency expects revenue to grow at a compound annual growth rate of 4.5% from 2025 to 2027, with EBITDA margins averaging around 34.2% during this period. Capital intensity is projected to average 15.3% over the same timeframe.
Factors that could lead to a rating downgrade include increased regulatory pressures, aggressive shareholder returns, significant investments leading to higher leverage, net debt/EBITDA sustained above 2.5x, or worsening operating environments.
For a rating upgrade, America Móvil would need to maintain total net debt/EBITDA between 1.0x-1.5x, improve profitability with EBITDA margins in the low-to-mid-30% range, see improved operating environments, and achieve (CFO-Capex)/Debt consistently at or above 20%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.