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Colombian Telecommunications Outlook: Profitability Deterioration & Pressured Cash Flow

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Note -- this news article is more than a year old.

Fitch Ratings says that it expects Colombian Telecommunication Companies's ratings to remain relatively stable. Fitch estimates industry wide EBITDA margin should continue a declining trend. Cash flows could be further pressured by the recent depreciation of COP against USD resulting in neutral to negative FCF generation.

Less favorable macroeconomic conditions, which could dampen consumer spending, price-based competition amid the sector maturity, and changes in the regulatory policies, could hinder penetrations of high-end smartphones and mobile data services, which have become key growth drivers for the industry.

The main downside risks along with a slower than expected GDP growth could be driven by high competitive pressures and additional capex burden due to the ongoing COP depreciation or greater investment needs.

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Tags: fitch ratings  Colombia