S&P Global Ratings upgraded the Colombian arm of Spanish telecommunications firm Telefónica by one notch, citing its plans to refinance COP1.34 trillion ($346 million) in short-term debt in the next 12 months.
S&P raised Colombia Telecomunicaciones (Coltel) to B+ from B and changed the outlook on the rating to positive from negative, the agency said Monday in a report.
The firm plans to refinance COP565 billion worth of bank loans that mature this year and COP775 billion of loans that come due in the first quarter of 2025, according to the ratings agency. The total equates to 70% of its short-term debt.
The rating’s positive outlook reflects expectations that Coltel will continue to see growth, generate more cash and refinance more debt, S&P said.
Coltel CEO Fabián Hernández said in a separate statement the upgrade is a result of “the company’s positive operational performance in recent years, which has allowed it to improve its positioning in the market and consolidate itself as a key player in the deployment of new technologies, such as fiber optics and the 5G mobile network.”
S&P said it could upgrade Coltel again in the next 12 to 18 months if the company manages to keep a debt-to-EBIDTA ratio close to 3 and increases its free operating cash flow to more than 10% of its debt, according to the ratings agency.