S&P: Entel cut to negative

Standard & Poor's said it revised its outlook on Empresa Nacional de Telecomunicaciones SA (Entel) to negative from stable, reflecting a more aggressive financial policy that will result in a deterioration of the company's credit measures and financial profile.

At the same time, S&P affirmed its BBB+ foreign and local currency long-term corporate credit ratings on Entel.

On April 18, Entel announced that it would increase its dividend pay-out to up to 80% of net income from 50% and called for a shareholders meeting to approve the distribution of an extraordinary dividend of about $312 million.

In Moody's opinion, even in the unlikely case that the extraordinary dividend is not approved, Entel will be subject to additional cash drains, which will pressure liquidity, require additional debt and cause a deterioration in the company's creditworthiness in the short term.

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