EM LATAM CREDIT: Entel Chile Affirmed at BBB- by Fitch

"* The affirmation reflects Entel's solid business model and market position in Chile and Peru, strong brand recognition and network quality, which should allow the company to sustain its strong performance. The Stable Outlook considers Fitch's expectation that gross and net leverage will trend toward 3.0x and 2.5x, respectively, despite a higher investment plan in the following years and a strong competitive environment.

• Fitch forecasts EBITDA margins to remain pressured at 22%-23% in the medium term due to telecom competition in Chile and Peru, as well as challenges with increasing ARPUs and cost inflation.

• Negative FCF: Fitch expects Entel to generate negative FCF in the medium term due to capex requirements and dividends paid (80% of net income) that are expected to consume cash flow from operations (CFO). Fitch forecasts capex to revenue will reach around 21%-22% in the next two years. This capex would lead FCF to remain negative at around CLP200 billion in 2025 and 2026." - Fitch
  ENTEL 3.05% 2032, $81.86, +.09