NEW YORK-Compania De Radiocomunicaciones Moviles S.A., one of two cellular carriers serving the greater Buenos Aires metropolitan area, received a BBB-debt rating from Standard & Poor’s Corp.
The New York-based rating agency May 4 assigned the low-tier investment grade rating to CRM’s $350 million medium-term senior unsecured notes program, of which $150 million already have been issued.
BellSouth Corp. owns 65 percent of CRM. Motorola Inc. holds a 25-percent stake and Teleper, an Argentine telecommunications equipment manufacturer, owns 10 percent.
“CRM’s financials are expected to weaken somewhat with the debt financing of future capital expenditures and the purchase of a personal communications services license … CRM plans to exercise its right to purchase a third PCS license (being made available) and compete directly with other international players,” said Matias Badia, an Argentina-based telecommunications analyst for S&P.
“The company faces a greater competitive challenge in the coming months following the auctioning of two (other) PCS licenses to other parties.”
CRM’s network now employs Narrowband Advanced Mobile Phone Service analog technology at 800 MHz and digital platforms for value-added services. Following its PCS license purchase, the carrier plans to deploy digital technology in the 1900 MHz bandwidth later this year.
Until the entry of Miniphone in 1993, CRM, which started service in 1989, was the sole cellular carrier in the Buenos Aires service area, Argentina’s wealthiest and most populous. At the end of last year, it had a 52-percent market share.
Doing business under the Movicom brand, CRM gains about 95 percent of its revenues from cellular telephony. The balance comes from trunked radio and, to a lesser degree, from paging.
“The company’s good market image and service quality sustain low voluntary churn rates of about 1 percent monthly even if its (freely set) airtime rates are slightly higher than the competition’s,” Badia said.
“Average revenues per subscriber should weaken following the addition of customers with lower consumption as a result of the establishment of calling party pays … (However), demand growth prospects are positive, sustained by growing economic activity and the establishment in early 1997 of the calling party pays system.”
