BRC Ratings – S&P Global reported that they upgraded the issuer rating of UNE EPM Telecomunicaciones (Tigo) to A- from BBB, and assigned a positive outlook based on various relevant aspects for the sector.
The first point they highlighted is the strategic continuity that has been implemented over the last year and a half, aimed at strengthening their credit profile and protecting the balance sheet even in a challenging environment. “We project an EBITDA generation between 2.1 and 2.5 trillion Colombian pesos (COP) for the 2024-2026 period, leverage levels below 2.5x, and sufficient cash generation to meet financial and investment obligations,” they explained.
Other arguments that improve Tigo’s rating
The report also explains the importance of access to external capital sources that provide Tigo with financial flexibility.
In 2024, the company issued bonds for COP 160 billion in the capital markets, making it one of the few corporate entities to issue debt. It was also evidenced in the last 12 months the good relationship they have with the banking sector through the renewal of guarantees and disbursement of new loans. These operations were fundamental in regaining confidence in the financial market, which will be relevant for continuing to execute their refinancing strategies in the coming years.
Another relevant point is Tigo’s significant position in the national telecommunications market, which supported the evaluation of their credit profile.
“The company holds the second position in revenue share thanks to the convergence of services it participates in: mobile, fixed-line, internet, and complementary technology services according to information from the Ministry of Information Technologies and Communications (MinTIC). We do not expect their market position to change in the medium term due to the entity’s capacity to sustain its customer base and levels of profitability per user in light of the industry’s high competition,” they pointed out.
From the rating agency, they stated they will monitor the potential purchase operation by Millicom International Cellular S.A of the 67.50% stake in Coltel, currently owned by Telefónica Hispanoamérica S.L.
They added that this transaction could strengthen Millicom’s position in the national market through its subsidiary Tigo Colombia; however, its actual scope within the operation, finances, and rating would depend on the final terms of the negotiation among the interested parties.
“It is important to mention that, considering the necessary regulatory, governmental approvals, and sale price for this transaction, we do not believe it can be materialized in 2024,” they concluded.
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