NEW YORK-Compania de Telecomunicaciones de Chile S.A. has raised about $204 million in euro-denominated bonds due 2004. The bonds received a speculative grade rating of Baa1 from Moody’s Investors Service Inc., New York.
Santiago-based CTC controls about 89 percent of the wireline customers in Chile. It recently acquired a 45-percent interest in Startel, the leading mobile wireless carrier in the country, from VTR S.A.
“Moody’s believes CTC will continue to utilize acquisitions similar to Startel as a means to achieve its growth strategy,” said Dennis Saputo, senior vice president, and Robert Konefal, managing director, of Moody’s corporate finance group.
“We also anticipate management will continue to employ a similar financing strategy as it did with Startel, which resulted in the issuance of equity to balance the debt-financed portion of that acquisition.”
The analysts also said they expect CTC to increase its capital expenditures during the next several years as it expands cellular and cable television services as a means to offset wireline revenues. Chilean telecommunications regulators have proposed tariff reductions in this segment of about 20 percent during the next five years.
“Moody’s believes that capital expenditures will exceed [CTC’s] internal cash generation during the intermediate term, causing an increase in foreign currency funding that likely will increase leverage,” Saputo and Konefal said.
“However, Moody’s anticipates earnings and cash flow will grow during the same period, despite the newly devised tariff regime, mitigating to some extent the increase in financial costs.”
