Moody’s improves the outlook for telecommunications in Latin America

Mexico City, May 3 (.).- The agency Moody’s improved its outlook for telecommunications companies in Latin America from “stable” to “positive”, although it warned of risks due to inflation and the Russian invasion of Ukraine.

The rating agency forecast an increase of 3% by 2022 and almost 10% by 2023 in the result before taxes and duties of the sector thanks to “efficiencies, mergers and acquisitions and consolidation, as well as solid but stable investments”.

“Telecommunications companies’ EBITDA and absolute EBITDA margins will increase during this period as they continue to capitalize on the efficiencies they gained in 2020 during the lockdown,” Rosa Morales, assistant vice president of Moody’s Investor Service, said in a commentary.

Although the agency does not state it, the telecommunications sector has been impacted by operations such as the sale made by the Mexican América Móvil (NYSE:) of Tracfone to Verizon (NYSE:) in the United States, and the sale made by the Spanish Telefónica (BME:) of the Telxius towers in Latin America.

While Telcel, from América Móvil, and the American AT&T (NYSE:) have begun the deployment of 5G networks in Mexico.

The rating agency points out that in 2022 and 2023 capital expenditures will be more stable for telecommunications operators in Latin America than in previous years, since they will represent 19.5% of revenues or about 14.7 billion dollars annually.

In addition, Moody’s cites inflation and competition as factors that will slow revenue growth in 2022, amid renewed inflationary pressures from the war between Russia and Ukraine, which could also disrupt supply chains.