Moody’s Axes Axtel

Moody’s has downgraded Axtel’s rating, to Ba3 from Ba2, citing competitive pressure and continued negative free cash flow due to high capex needs. The outlook is stable. “The intense competitive environment is expected to continue to place pressure on the company’s operating margins and cash generation, making it a challenge to sustain its leverage tolerance level of 3x debt to Ebitda, if capital expenditure requirements remain elevated,” the agency says. Moody’s believes Axtel will be challenged by Telmex and Cable TV operators as well as wireless substitution.