Moody Changes Outlook for America Movil to Positive

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Moody's Investors Service has affirmed America Movil's A3 global foreign currency and global domestic currency ratings and changed the outlook to positive. Simultaneously, Moody's de Mexico affirmed America Movil's Aaa.mx and MX-1 national scale ratings and maintained the stable outlook on these ratings.

In addition, Moody's assigned an A3 rating with a positive outlook to America Movil's proposed US$750 million in global notes due 2019 and guaranteed by Radio Movil Dipsa, S.A de C.V. Proceeds from the new notes will be used for general corporate purposes.

The change in outlook on America Movil's global ratings to positive was based on Moody's expectation that America Movil will continue to be successful in operating in an increasingly competitive environment and that this will be reflected in its cash generation and liquidity financial metrics. An upgrade of America Movil's ratings could occur if the company is able to maintain current EBITDA margins on a consolidated basis while sustaining its market share in countries such as Brazil. In addition, a potential upgrade would consider the ability and willingness of the company to bolster its liquidity position through a committed back stop facility for its commercial paper programs.

America Movil's ratings are supported by its status as Mexico's largest wireless operator with market share of approximately 72%, its premier position as regional mobile telecom service provider in Latin America with over 190 million wireless subscribers, strong operating cash flow of over US$8 billion in the last twelve months ended in June 30, 2009 and low leverage of 0.9 times adjusted debt/EBITDA. The company's ratings are, however, constrained by its reliance on pre-paid subscribers (over 88% of total subscribers as of June 2009), which Moody's believes are more vulnerable to changes in consumer disposable income than post-paid subscribers. In addition, the ratings incorporate the challenges in improving margins and scale in the highly competitive Brazilian market, which is expected to become an increasing proportion of the company's consolidated results.

America Movil's liquidity position shows a strong coverage of working capital needs, capital expenditures requirements, near-term debt maturities as well as dividend and tax payments. Moody's estimate of about US$11 billion of available liquidity during the four quarters to June 30, 2010 is comprised of funds from operations of roughly US$9.5 billion for the next 12 months plus cash and cash equivalents balance of about US$1.5 billion at June 30, 2009. The company also counts on its sizeable committed US$2 billion revolving credit facility, which matures in April 2011 and is fully available today. Moody's estimate of cash outflows during this same period of about USD 5.8 billion primarily includes scheduled debt maturities totaling about USD 550 million up to June 30, 2010, dividend payments of about US$700 million (paid in August 2009), capex in the amount of about US$2.8 billion, and taxes in the amount of about US$1.7 billion. Net available cash of US$5.5 billion could be used for share repurchases, a common AMX practice. During 2009, AMX has repurchased an average of US$400 million of shares per quarter.

The ratings could be negatively impacted if the company's Mexican operations and/or financial performance is materially impacted by intensifying competition, if a change in regulation abruptly impacts the company's operations or if America Movil makes large debt-funded acquisitions or significant returns of capital to shareholders such that adjusted debt to EBITDA is likely to remain above 1.5 times for an extended period of time.

Posted to the site on 19th October 2009