América Móvil’s bid for control of Dutch telco KPN is putting the Mexican firm’s A2 and A3 senior unsecured domestic and foreign currency ratings at risk of downgrade.
Moody’s Investors Services has placed América Móvil’s ratings on review for downgrade due to concerns the proposed KPN takeover brings more cons than pros to the Mexican operator. Soummo Mukheree, a Moody's vice president, senior credit officer and lead analyst for America Móvil, says the firm is concerned about the operational challenges and impact on the telco’s debt burden if the takeover goes ahead.
“This is a sizeable transaction for America Móvil, which if funded with debt, clearly puts its leverage, as measured by Total Debt to Adjusted EBITDA above our 1.5 times threshold for the A2 rating category,” Mukheree notes.
KPN bosses are currently considering América Móvil’s €7.2 billion bid for the 70% of the Dutch telco it doesn’t already own, and are likely to discuss the offer at a forthcoming EGM.