S&P gives LatAm telecoms operators a negative outlook

20 May 2003

A report issued yesterday by credit rating agency Standard and Poor’s claimed the telecoms markets of Latin America continue to be adversely affected by financial constraints, funding shortfalls and regulatory delays. Whilst no singular trend was discernible from the report due to the diverse nature of the region’s markets, S&P claimed that 26% of the operators studied were in default of credit agreements, with a further 35% of the remainder having a negative outlook. The agency said it foresaw no improvement in the ratings until there is a wider improvement in the economies of the region.

S&P said that whilst gaining access to funding remained a problem for operators worldwide, the problem was particularly apparent in Latin America where there was little or no merger activity in 2002, apart from the burgeoning Brazilian wireless market where the likes of Telecom Americas, BCP and Telesp Celular Participacoes have been active in recent months. Several of the larger economies, including Argentina, had witnessed recent improvements in currency exchange rates, whilst telecoms operators in Argentina, Brazil and Chile had experienced stable traffic volumes, higher interconnection fees and improving ARPU figures. However, for the most part S&P claims Latin American operators continue to be blighted by sluggish economic trends, restructuring obligations and heavy debt burdens.