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Fitch said the telco's financial profile could be affected by the takeover of Brazilian company Vivo.
"The combination of the 7.5bn-euro [US$10.2bn] cash price paid for Vivo, the impact of economic conditions and the public targets set for dividends per share suggest that Telefónica's leverage will remain elevated for some time," Fitch said in a note.
"Telefonica is unlikely to be able to reduce capital expenditure over the coming years."
The operator generated revenues of 7.11bn euros in Latin America in the second quarter of the year, climbing 11.7% compared to 6.37bn euros in 2Q10. TEF's Q2 operating profits in the region totaled 1.49bn euros, basically flat year-on-year.
In Latin America, Telefónica reached more than 190mn total accesses at end-Q2, an 8.1% increase compared to 176mn accesses a year ago.