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Fitch: Telefonica Chile's Reorganization Plan - No Rating Impact
March 10, 2017 / 9:25 PM / 6 months ago

Fitch: Telefonica Chile's Reorganization Plan - No Rating Impact

(The following statement was released by the rating agency) CHICAGO, March 10 (Fitch) Fitch Ratings believes that the reorganization of the Telefonica Chile Group will have no credit impact for the current creditors of Telefonica Moviles Chile S.A. (TMCH) and Telefonica Chile S.A. (TCH), as the credit profiles of the group will remain largely unchanged. TMCH announced its board of directors' approval on the group reorganization plan on March 6, 2017, which will result in a merger between the company and its parent, Inversiones Telefonica Moviles Holding S.A. (ITMH), with the latter being the surviving entity. ITMH is a holding company for the group in Chile that also owns 97.9% of TCH, which is the fixed-line operator. As a result, the ratings of the newly merged ITMH will be based on the full consolidation of TMCH, TCH, and ITMH, which does not have any operations. The extraordinary shareholders meeting will be convened on March 22, 2017 to approve the transaction. All of TMCH's existing debt will be assumed by the merged entity, and ITMH will change the legal name to Telefonica Moviles Chile S.A. upon the consummation of the merger. The merger is expected to be completed on May 1, 2017, if approved by the shareholders. Fitch believes that the credit quality of the group will not change following the merger. Fitch currently rates both TMCH and TCH at 'BBB+', and ITMH's new ratings will be at the same level of 'BBB+' based on the consolidated credit profile of the group. TCH and TMCH both have solid financial profiles for a 'BBB+' rating level, and their current ratings already incorporate a degree of financial and operational linkage between them given the flexible intercompany loans, integrated business strategy under the common management and brand unity, as well as sales coverage. This relationship will remain intact, as TCH will become a subsidiary of TMCH following the merger. The ratings also reflect Telefonica Chile Group's entrenched leading positions in the Chilean telecommunications market, strong brand recognition and network competitiveness, and sound financial profile backed by solid cash flow generation. Fitch does not foresee any material change to these credit qualities in the short- to medium-term. TMCH's existing ratings will be withdrawn upon the completion of the merger as Fitch will assign a new rating to ITMH, and the ratings for TMCH's local debt, which will be transferred to ITMH, will remain at its current level of 'AA(cl)'. All TCH's existing ratings will also remain the same. Contact: Primary Analyst Alvin Lim, CFA Director +1 312 368 3114 Fitch Ratings Inc. 70 W Madison St. Chicago, IL 60602 Secondary Analyst Francisco Mercadal Associate Director +56 2 2499 3340 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available on www.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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