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Are Slim, Salinas and Azcárraga happy?: The outlook for telecommunications companies improves

The rating agency Moody’s changed the perspective of the telecommunications sector in Latin America from “stable to positive” due to a higher operating flow reported by the companies (EBITDA, for its acronym in English) and expects that by 2023 its revenues will grow again .

América Móvil reported a flow of 30.3 million pesos, which represents an annual increase of 5.4%. In addition, the telecommunications giant reported a net profit of 30,797 million pesos, a considerable increase compared to 1,810 million pesos in the same period of 2021.

In the same period, AT&T reported the highest operating flow for any quarter, since it operates in the country. The telecommunications company of American origin obtained an EBITDA of 59 million dollars, which meant that its operating flow increased fivefold, compared to the 11 million dollars registered in the same period last year, it was also 23 million dollars better against the previous quarter.

Moody’s explained that the change in outlook for this sector is driven by efficiencies, and consolidation, as well as solid and stable investments that generate positive free flow. Sector EBITDA less capital expenditures is expected to rise about 3% this year and nearly 10% in 2023.

Grupo Televisa obtained approval from the Federal Institute of Telecommunications (IFT) to merge with Univisión and thus create ViX, its streaming platform aimed at the Spanish-speaking public. This movement allowed Televisa’s net income to reach 52,642.1 million pesos, a considerable growth when compared to the losses of 584.4 million pesos registered in 2021.

In April, WarnerMedia, part of the AT&T telecommunications group, managed to merge with Discovery to create a new streaming company.

Moody’s also notes that low pay-TV and data penetrations across the region, in general, still offer incremental benefits, as consumers upgrade to , such as 5G , and infrastructure is ready to absorb higher levels of demand. .

América Móvil officially launched 5G in February, with which it expects its revenues to increase through the growth of user spending on postpaid plans. AT&T reported in recent days that this new network will reach Guadalajara, Monterey and will increase its coverage in Mexico City.

Moody’s warned that inflation and competition are risk factors that may slow Latin American telecommunications operators’ revenue growth in 2022, due to new inflationary pressures from the military conflict between Russia and Ukraine, including the possible interruption in the supply chain.

“While inflation and competition will curb revenues in 2022, strong growth in data consumption continues to benefit Latin American telcos, and revenues will return to growth in 2023 as consumers demand faster data networks. fast and the existing infrastructure is ready to absorb greater demand,” the rating agency detailed in a statement.

Rosa Morales, Assistant Vice President of Moody’s Investors Service, explained that by 2023, some telecommunications companies will reap the benefits of mergers and acquisitions executed even before the pandemic, with additional stimulus thanks to the expected recovery, particularly in the economies linked to tourism.

“The increasingly common asset minimization model in the Latin American telecommunications sector, with companies selling towers and other types of passive infrastructure, has only limited implications for the credit quality of companies.”

Between 2022 and 2023, capital expenditures will be more stable for Latin American telcos than in previous years, with 19.5% of revenues equaling $14.7 billion annually.

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