Fitch Ratings has affirmed
Fitch has also affirmed
The ratings reflect the company's leading market positions across well-diversified operating geographies and service offerings, underpinned by solid network competitiveness and leading business-to-consumer (B2C) and business-to-business (B2B) offerings.
Key Rating Drivers
Steady Net Leverage: Fitch forecasts C&W will maintain net leverage in the 4.0x-4.5x range over the medium term. Moderate EBITDA margin expansion and growth in broadband and B2B services should help the company to delever organically at a gradual pace over the rating horizon.
Moderately Improving Operating Prospects: Fitch forecasts C&W's EBITDA to expand above
Diversified Operator: The group's business diversification explains the resilience of its revenue compared with other speculative-grade issuers in the region, which generally have higher dependence on mobile revenues that are less sticky than subscription fixed-line and B2B service revenues. B2C mobile accounted for 28% of C&W's 2023 revenue, while B2C fixed accounted for 25%, and B2B represented the remaining 47%. Businesses in the
Strong Market Position: Strong market share in duopoly markets reduces the risk of new entrants and allows C&W to maintain relatively stable ARPUs. C&W has the No. 1 or 2 position in its major markets, many of which are a duopoly between C&W and
LLA Linkage: Fitch analyzes C&W on a standalone basis and also monitors the parent's credit quality. The credit pools are legally separate, but LLA has a history of moving cash around the group for investments and acquisitions. LLA has a modest amount of debt (
Instrument Ratings and Recovery Prospects: The secured debt at
Derivation Summary
Compared with its sister entity,
C&W operates in slightly more balanced markets compared with
Millicom's consolidated net leverage, at around 3x, is lower than LLA's at around 4.7x. Comcel's and Telecel's respective ratings reflect strong linkage with their parent, as Millicom heavily relies on these wholly owned subsidiaries' dividend upstreams to service its debt. Millicom's subsidiary in
Key Assumptions
B2B revenues growing low-to-mid-single digits;
Net fixed customer additions of approximately 25,000 per year;
Fixed-line customer ARPUs of around
Mobile subscribers recovering modestly in 2024 as continued strong growth in postpaid offsets slowing growth in prepaid;
Mobile service ARPUs of around
Fitch-defined EBITDA margins expanding to around 43% by 2026 from 38% in 2023, driven by the benefit of synergies, cost-savings initiatives, and modest operating leverage;
Capital intensity of around 13-14% over the medium term;
Excess cash flow returned to shareholders or kept for acquisitions or investments.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Fitch does not anticipate an upgrade in the near term given C&W's and LLA's leverage profiles;
Longer-term positive actions are possible if debt/EBITDA and net debt/EBITDA are sustained below 4.25x and 4.0x, respectively, for C&W and LLA;
--(CFO-Capex)/Debt ratio trending towards 7.5%.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Total debt/EBITDA and net debt/EBITDA at C&W sustained above 5.25x and 5.00x, respectively, due to organic cash flow deterioration or M&A;
While the three credit pools are legally separate, LLA net debt/EBITDA sustained above 5.0x could result in negative rating actions for one or more rated entities in the group.
Liquidity and Debt Structure
Sound Liquidity: Projected pre-dividend FCF averaging around
Issuer Profile
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
C&W has an ESG Relevance Score of '4' for Exposure to Environmental Impacts due to its operations in a hurricane-prone region, which has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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