NEW YORK-Celumovil S.A., Bogota, Colombia, plans to raise $680 million by a private debt sale and a revolving bank loan to refinance outstanding debt and fund capital expenses and customer-acquisition costs.
Bavaria, a diversified Colombian industrial conglomerate, owns 86 percent of Celumovil. AT&T Corp. has invested $20 million in Celumovil and owns 14 percent of the digital cellular carrier, which had at least 570,000 customers as of June 30, all in the Atlantic and Eastern regions of the country. Of these, 240,000 were acquired during the first six months of this year.
For the 12-month period ending June 30, Celumovil subscribers averaged 140 minutes of use each month and paid $72. Churn for that year-long period was at a below-average rate of 17 percent.
“Celumovil has captured a large proportion of the corporate subscriber market,” said Robert N. McCreary, senior vice president, and Cyrille R. Conseil, senior analyst, for Moody’s Investors Service speculative grade ratings group, New York.
“We anticipate that future churn is likely to increase to 20 percent or so as the quality of added subscribers erodes and competitive wireless providers potentially come into the market in 2000.”
Moody’s assigned a B3 rating to Celumovil’s proposed $250 million private placement of senior notes due 2008 and a speculative grade rating two notches higher, at B1, to the carrier’s $430 million bank credit facility. The notes are subordinate in repayment priority to $430 million in outstanding debt obligations, while the credit facility is secured by all of Celumovil’s assets, including its cellular concession from the Colombian government.
Celumovil benefits from calling party pays, the duopoly cellular environment, a digital network, low national wireless penetration rates of 3 percent and the poor quality of wireline services in Colombia, the Moody’s analysts said.
However, they added, “Celumovil’s balance sheet is highly leveraged, with pro forma consolidated debt of $969 million, while its net revenues were $215 million and [U.S. Generally Accepted Accounting Principals cash flow] was $13 million for the six months ended June 30.”
