RIO DE JANEIRO--(BUSINESS WIRE)--Fitch Ratings has taken the following rating actions on Telefonica del Peru S.A.A. (TDP) as follows:
--Local currency Issuer Default Rating (LC IDR) affirmed at 'BBB+';
--Foreign currency (FC) IDR upgraded to 'BBB+' from 'BBB';
--PEN754 million senior notes due 2016 upgraded to 'BBB+' from 'BBB'.
The Rating Outlook is Stable.
In addition Fitch's Peruvian affiliate Apoyo & Asociados has a national scale rating of 'AAA(pe)' for TDP.
The rating action follows Fitch's upgrade of Peru's long-term FC IDR to 'BBB' from 'BBB-'; its long-term LC rating to 'BBB+' from 'BBB-', and its Country Ceiling to 'BBB+' from 'BBB'. TDP's FC IDR is not constrained by Peru's Country Ceiling anymore. Peru's upgrade reflects Fitch's view that reduced uncertainty regarding macroeconomic policy continuity and changes to the fiscal contribution of the mining sector under President Ollanta Humala will continue to support the strength of the sovereign's external and fiscal accounts as well as Peru's robust macroeconomic performance.
TDP's ratings are supported by its strong consolidated financial profile, low leverage, healthy cash flow generation and manageable debt maturity. TDP and its subsidiaries occupy a solid business position as the largest Peruvian telecommunications group and a diversified revenue stream with integrated operations from their various business segments. TDP is controlled by Telefonica SA (Telefonica) in Spain (rated by Fitch at 'BBB+'; Outlook Stable), with relevant presence in Latin America. As limiting factors, the ratings incorporate moderate regulatory and political risks and heightened competition. Fitch also follows the definition of the renewal of Telefonica Moviles S.A.'s concessions, as it is TDP's most relevant subsidiary and has an important role in the group's credit profile, as well as the discussions with the Peruvian tax administration related to a potential payment of back taxes from previous years.
Key Rating Drivers:
A potential upgrade for TDP's LC IDR is limited due to the recent downgrade in Telefonica SA. A weakening in TDP's operational performance or consolidated financial profile or further downgrades for Telefonica SA can negatively pressure its ratings.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology' (Aug. 12, 2011);
--'Rating Global Telecoms Companies' (Sept. 16, 2010).
Applicable Criteria and Related Research:
Corporate Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229
Rating Global Telecoms Companies - Sector Credit Factors
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=550205
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