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Fitch Ratings Assigns Initial Issuer Default Rating to Millicom International Cellular SA-Reuters


Tuesday, 29 Jan 2013 04:33am EST 

Reuters reported that Fitch Ratings has assigned an Initial Issuer Default Rating (IDR) to Millicom International Cellular SA. Local Currency IDR is 'BB+' and Foreign Currency IDR is 'BB+'. The Company‚Äôs ratings reflect its geographically diversified portfolio, main market positions in most of its markets, value-added services orientation, expectation of moderate leverage, good liquidity and pre-dividend free cash flow (FCF) generation. The ratings are tempered by exposure to markets with low sovereign ratings and low GDP per capita, pricing pressures, debt allocation between subsidiaries and holding company, shareholder returns policy and recent M&A activity. The Company's focus on growing value-added services (VAS) should also alleviate pressures from voice revenues, especially in Latin American markets where penetration is approaching a mature stage. The ratings incorporate the Company's exposure of its operations to countries with low sovereign ratings, which tend to be more politically unstable and more volatile in terms of economic growth. This adds currency risk, as part of its debt is denominated in USD and cash flow is generated in local currencies. For the 12 months ended September 30, 2012, approximately 82% of EBITDA and 84% of operating FCF was generated by Central and South American operations. The African operations, with the exception of Tanzania, are not expected to generate significant cash flow over the next few years. 

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