|By Business Wire||
|August 13, 2014 05:34 PM EDT||
Fitch Ratings has affirmed the foreign- and local-currency Issuer Default Ratings (IDRs) of Telemovil El Salvador, S.A. (Telemovil) and Telemovil Finance Co. Ltd (TF) at 'BB'. The Rating Outlook is Stable. Fitch has also affirmed USD310.6 million senior notes due 2017 issued by TF at 'BB'.
At the same time, Fitch has withdrawn the IDRs of TF as the entity is not considered analytically meaningful for the credit quality of the notes which have been issued out of it and fully guaranteed by Telemovil.
Telemovil's ratings reflect its diversified service offering, leading positions in the mobile and pay television segments in El Salvador, strong brand recognition, extensive network coverage, and moderate leverage for the rating category. The company's credit quality is tempered by a persistently high level of competition which continues to weigh on its market share and cash flow generation.
The ratings also factor in Telemovil's strong linkage with its parent, Millicom International Cellular S.A. (MIC) (rated 'BB+' by Fitch), which helps Telemovil to achieve synergies related to the larger scale of the parent and provides expertise in management. It also considers the payment of dividends and royalties to MIC and Telemovil's limited geographic diversification.
ARPU Decline Continues:
Telemovil's revenue growth is likely to remain weak in 2014 and 2015, following a 1% contraction in 2013, due to the continued erosion in mobile ARPU against the backdrop of the intense competition and mature industry conditions, as the penetration rate was approximately 120% at the end of June 2014. The company's mobile strategy is centered on mobile data revenue growth which is expected to offset further possible declines in voice revenues. In addition, aggressive tariff-based strategies from competitors could prevent any meaningful recovery in Telemovil's market share; market share has fallen to 36% at the end of second quarter 2014 (2Q'14) from 40% in 2013.
Fitch forecasts Telemovil's EBITDA margin will trend down below 30% over the medium term due to continued pressures from competitors. The revenue mix will become even more unfavorable as the lucrative mobile voice revenues gradually decline while marketing costs, including handset subsidies, continue to increase, and the contribution from the lower margin fixed-line businesses grow. Telemovil's EBITDA margin fell to 31% during 2013 from 36% in 2013, as calculated by Fitch.
Strong Growth in Other Segments:
Positively, Telemovil's non-mobile segments, including pay-TV, broadband, and B2B solutions, which together accounted for 32% of total revenues in 2013, continued to grow strongly and this trend should continue over the medium term given the still low penetration of these types of services. Telemovil's offering of bundled services, with the newly launched Direct-To-Home TV, should help ward off the competitive threats to a certain extent and mitigate negative growth in the mobile business.
By 2017, Fitch expects the company's non-mobile segment is expected to account for almost 40% of total sales. Mobile finance solutions will remain the fastest growing segment in the company, with double-digit annual revenue growth, yet its earnings contribution will still be small over the medium term.
Positive Pre-Dividend FCF:
Telemovil should be able to maintain its positive pre-dividend free cash flow (FCF) generation over the medium term despite the increasing capex amid weak EBITDA growth. The company plans to increase capex by approximately 20-30% from the 2013 level, which will represent about 14%-15% of revenues during the period, primarily for 3G/Long Term Evolution (LTE) coverage and capacity, as well as for pay-TV and fixed-line services. The increase in capex should be covered by the cash flow from operations (CFFO) before dividends over the medium term.
In addition, dividend payment has decreased significantly, by about 75% from the 2010-2012 levels. Any significant increase in the shareholder distribution over the medium term should be limited given the company's large investment plans. In Fitch's view, Telemovil's upstream payment to the parent, aside from the regular royalty fees, could be flexible depending on its financial condition and the operational outlook.
Telemovil's financial net leverage, measured by adjusted net debt-to-EBTIDAR, is forecast to remain above 2.5x over the medium term as EBITDAR in absolute terms will be relatively stable. This figure compares with 2.3x and 1.9x at the end of 2013 and 2012, respectively. Excluding the lease adjustment, the company's net debt-to-EBITDA was 1.7x at end-2013.
The company's gross leverage will decrease to close to 3.0x during 2014 from 3.7x at the end of 2013 as the company has successfully completed its partial tender offer of USD139 million on its USD450 million bond due 2017 in April 2014.
The company's liquidity profile is good as it does not face any debt maturities until 2017. Telemovil held USD206 million of readily available cash as of March 31, 2014.
Negative: Future developments that may, individually or collectively, lead to a negative rating action include:
--Deterioration in the company's EBITDA and FCF generation along with weak revenue growth due to competitive pressures and such. factors as material loss in mobile market share, ARPU erosion, and substantial increase in marketing expenses;
--Worse-than-expected negative impact of the introduction of number portability and higher-than-expected auction prices for 4G spectrums;
--Change in MIC's financial policy, including larger cash upstreams from its subsidiaries, or any significant deterioration in the parent's credit profile.
Adjusted net debt-to-EBITDAR above 3.0x in conjunction with a weak liquidity profile on a sustained basis.
Positive: While ratings upgrades are not likely in the short- to medium-term due to the competitive operating environment, future developments that may, individually or collectively, lead to a positive rating action include:
--Reductions in net leverage below 2.0x on a sustained basis, driven by improved service diversification, enhanced market position, positive change in the competitive/regulatory environment, and/or explicit support from its parent MIC.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Corporate Rating Methodology', May 28, 2014
Applicable Criteria and Related Research:
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Recently announced Azure Data Lake addresses the big data 3V challenges; volume, velocity and variety. It is one more storage feature in addition to blobs and SQL Azure database. Azure Data Lake (should have been Azure Data Ocean IMHO) is really omnipotent. Just look at the key capabilities of Azure Data Lake:
Oct. 6, 2015 09:00 PM EDT Reads: 227
SYS-CON Events announced today that G2G3 will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based on a collective appreciation for user experience, design, and technology, G2G3 is uniquely qualified and motivated to redefine how organizations and people engage in an increasingly digital world.
Oct. 6, 2015 08:15 PM EDT Reads: 341
In his session at @ThingsExpo, Tony Shan, Chief Architect at CTS, will explore the synergy of Big Data and IoT. First he will take a closer look at the Internet of Things and Big Data individually, in terms of what, which, why, where, when, who, how and how much. Then he will explore the relationship between IoT and Big Data. Specifically, he will drill down to how the 4Vs aspects intersect with IoT: Volume, Variety, Velocity and Value. In turn, Tony will analyze how the key components of IoT ...
Oct. 6, 2015 08:00 PM EDT Reads: 307
When it comes to IoT in the enterprise, namely the commercial building and hospitality markets, a benefit not getting the attention it deserves is energy efficiency, and IoT’s direct impact on a cleaner, greener environment when installed in smart buildings. Until now clean technology was offered piecemeal and led with point solutions that require significant systems integration to orchestrate and deploy. There didn't exist a 'top down' approach that can manage and monitor the way a Smart Buildi...
Oct. 6, 2015 05:00 PM EDT Reads: 250
SYS-CON Events announced today that Cloud Raxak has been named “Media & Session Sponsor” of SYS-CON's 17th Cloud Expo, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Raxak Protect automates security compliance across private and public clouds. Using the SaaS tool or managed service, developers can deploy cloud apps quickly, cost-effectively, and without error.
Oct. 6, 2015 04:40 PM EDT
As-a-service models offer huge opportunities, but also complicate security. It may seem that the easiest way to migrate to a new architectural model is to let others, experts in their field, do the work. This has given rise to many as-a-service models throughout the industry and across the entire technology stack, from software to infrastructure. While this has unlocked huge opportunities to accelerate the deployment of new capabilities or increase economic efficiencies within an organization, i...
Oct. 6, 2015 03:00 PM EDT Reads: 116
“All our customers are looking at the cloud ecosystem as an important part of their overall product strategy. Some see it evolve as a multi-cloud / hybrid cloud strategy, while others are embracing all forms of cloud offerings like PaaS, IaaS and SaaS in their solutions,” noted Suhas Joshi, Vice President – Technology, at Harbinger Group, in this exclusive Q&A with Cloud Expo Conference Chair Roger Strukhoff.
Oct. 6, 2015 02:45 PM EDT Reads: 370
Scott Guthrie's keynote presentation "Journey to the intelligent cloud" is a must view video. This is from AzureCon 2015, September 29, 2015 I have reproduced some screen shots in case you are unable to view this long video for one reason or another. One of the highlights is 3 datacenters coming on line in India.
Oct. 6, 2015 02:00 PM EDT Reads: 227
“The Internet of Things transforms the way organizations leverage machine data and gain insights from it,” noted Splunk’s CTO Snehal Antani, as Splunk announced accelerated momentum in Industrial Data and the IoT. The trend is driven by Splunk’s continued investment in its products and partner ecosystem as well as the creativity of customers and the flexibility to deploy Splunk IoT solutions as software, cloud services or in a hybrid environment. Customers are using Splunk® solutions to collect ...
Oct. 6, 2015 01:00 PM EDT Reads: 580
SYS-CON Events announced today that ProfitBricks, the provider of painless cloud infrastructure, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. ProfitBricks is the IaaS provider that offers a painless cloud experience for all IT users, with no learning curve. ProfitBricks boasts flexible cloud servers and networking, an integrated Data Center Designer tool for visual control over the...
Oct. 6, 2015 01:00 PM EDT Reads: 738
You have your devices and your data, but what about the rest of your Internet of Things story? Two popular classes of technologies that nicely handle the Big Data analytics for Internet of Things are Apache Hadoop and NoSQL. Hadoop is designed for parallelizing analytical work across many servers and is ideal for the massive data volumes you create with IoT devices. NoSQL databases such as Apache HBase are ideal for storing and retrieving IoT data as “time series data.”
Oct. 6, 2015 12:45 PM EDT Reads: 458
Clearly the way forward is to move to cloud be it bare metal, VMs or containers. One aspect of the current public clouds that is slowing this cloud migration is cloud lock-in. Every cloud vendor is trying to make it very difficult to move out once a customer has chosen their cloud. In his session at 17th Cloud Expo, Naveen Nimmu, CEO of Clouber, Inc., will advocate that making the inter-cloud migration as simple as changing airlines would help the entire industry to quickly adopt the cloud wit...
Oct. 6, 2015 12:30 PM EDT Reads: 581
As the world moves towards more DevOps and microservices, application deployment to the cloud ought to become a lot simpler. The microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. In his session at 17th Cloud Expo, Raghavan "Rags" Srinivas, an Architect/Developer Evangeli...
Oct. 6, 2015 12:15 PM EDT Reads: 107
DevOps is gaining traction in the federal government – and for good reasons. Heightened user expectations are pushing IT organizations to accelerate application development and support more innovation. At the same time, budgetary constraints require that agencies find ways to decrease the cost of developing, maintaining, and running applications. IT now faces a daunting task: do more and react faster than ever before – all with fewer resources.
Oct. 6, 2015 12:00 PM EDT Reads: 338
SYS-CON Events announced today that VividCortex, the monitoring solution for the modern data system, will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. The database is the heart of most applications, but it’s also the part that’s hardest to scale, monitor, and optimize even as it’s growing 50% year over year. VividCortex is the first unified suite of database monitoring tools specifically desi...
Oct. 6, 2015 12:00 PM EDT Reads: 411