América Móvil rating remains at risk

Moody’s Investors Services is still considering downgrading América Móvil’s credit rating, despite the Mexican telco ditching a €7.2 billion bid to acquire Dutch incumbent KPN.
 
The ratings agency is considering cutting América Móvil’s A2 and A3 senior unsecured domestic and foreign ratings, despite conceding the telco’s decision to drop its takeover of KPN is a positive move.
 
"While the withdrawal of the offer is viewed as generally credit positive for América Móvil's ratings, as it eliminates the potential heightened operational and financial challenges of controlling KPN, our review will still focus on the potential for other acquisitions and the likely impact on its leverage and other credit metrics," Moody's senior analyst, Soummo Mukherjee, explained in an issuer comment on Friday.
 
América Móvil pulled out of the proposed KPN deal last week after refusing to increase its €2.40 per share offer – a price KPN bosses believe undervalues the company.
 
The Mexican operator threatened to drop its takeover in September, accusing KPN’s shareholder foundation of seeking to block the deal by increasing its holding of preference shares. The firm holds a 30% stake in KPN, and agreed to back the sale of the Dutch telco’s German subsidiary E-Plus to rival Telefonica if KPN bosses accepted its offer.
 
América Móvil’s decision prompted speculation it may seek to takeover Telekom Austria, the other European telco it holds a stake in, Reuters reports.