Fitch: Colombia Telecommunications Moving Toward Consolidation

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Fitch Ratings says in a research note that it expects stable growth for the Colombian telecommunications sector over the medium term given the favorable macroeconomic environment and rising revenues from Internet data traffic.

Fitch forecasts that mobile data revenues will continue to increase, representing about 25% of total revenues by 2017, driven by rising smartphone penetration and the rollout of the LTE services.

They also said that the Colombian telecommunications sector is moving toward consolidation, driven by competitive pressures, high investment needs and the downward trend in service prices. These factors have required companies to strengthen their operations and service structure.

Fixed-line and mobile operators in Colombia rated by Fitch generally have robust credit profiles, adequate levels of operating profitability, and cash generation ability to finance a significant portion of their investment needs. Leverage is manageable and relatively low. Fitch estimates that in the next few years free cash flow generation will be neutral to negative, due to higher capital investment needs.

However, Fitch does not believe this will lead to significant additional indebtedness by operators.

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Tags: Colombia 

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