Press Release

Fitch Affirms ETB's National Rating at 'AA+(col)'; stable outlook

Bnamericas Published: Monday, February 06, 2023

By Fitch Ratings

This is a machine translation of the original press release issued in Spanish

Fitch Ratings - Bogotá - 03 Feb 2023: Fitch Ratings affirmed the long-term national rating of Empresa de Telecomunicaciones de Bogotá, SA, ESP (ETB) at 'AA+(col)'. The Outlook is Stable.

ETB's credit profile reflects its low leverage and its business concentration in the city of Bogotá, with an income structure focused mainly on its business -to- business (B2B) and government (40% of income), and in the segment of households and small and medium-sized companies (52% of income).

The statement reflects the continued deployment of ETB's network, which has resulted in approximately 1.7 million homes connectable to the fiber-to-the-home (FTTH) internet network. ETB's ratings are constrained by its limited geographic diversification in its domestic services and low penetration of its estimated 30% FTTH network, limiting the company's ability to achieve significant revenue and EBITDA growth in the near term. .


Low Leverage with an Upward Trend: Fitch estimates that ETB's total gross and net leverage will be 2.1 times (x) and 0.9x, respectively, as of December 31, 2022. Projections indicate a maximum increase in net leverage up to 1.1x in 2023 due to high capital expenditure (capex) needs to support the continued conversion of the fiber network, as well as the payment of dividends owed to the District of Bogotá. Fitch expects gross leverage to trend towards 1.9x in the coming years.

Revenue Diversification Continues: ETB's commercial strategy seeks to reduce the percentage of revenue from its copper network (it is expected that by 2022 it will be less than 10%) and increase revenue from non-traditional services. This revenue restructuring is key for ETB and will contribute to improving its EBITDA margin and the return on its main investments in the network. Fitch estimates that about 40% of the company's revenues come from more stable B2B services and 52% from services to homes. In addition, the recently announced partnership agreement with UNE EPM Telecomunicaciones SA (TIGOUNE) will add additional revenue as the latter will use ETB's network to increase its presence in Bogotá and is expected to improve ETB's margin potential as it expands. the use of your network.

High Levels of Competition: Fitch estimates that the company's competitive position will remain under pressure as integrated local telecommunications operators pursue their business strategies to retain and/or grow their subscriber base in Bogotá, while ETB continues to implement its strategy to replace copper subscribers with FTTH customers. ETB is the second fixed operator in Bogotá after the leader Claro, in terms of subscribers. At the national level, ETB's estimated market shares are 14% in fixed telephony, 8% in broadband and 2% in subscription TV. Claro is the market leader in Colombia with subscriber market shares of 42%, 37% and 47% in the same fixed services.

Sustained Negative FCF: The agency estimates that ETB's free cash flow (FCF) will be negative in the rating horizon given the lower profitability and higher capital investments associated with the expansion and penetration of its FTTH network in Bogotá. Capex intensity is expected to peak at around 38% in 2022, as ETB continues to improve the quality and maintenance of its FTTH network. Fitch expects investment outlays to decline to 22% of revenues in 2025. The dividend payment agreement with the Bogotá District will add pressure to the FFL.


ETB's national rating is below the rating of peers engaged in the provision of telecommunications services in Colombia. The company's credit rating is one notch below that of TIGOUNE [AAA(col) Outlook Stable] and Colombia Telecomunicaciones SAESP BIC (ColTel) [AAA(col) Outlook Stable] due to its geographic and revenue diversification plus low, which results in lower operating generation. Fitch believes that the low penetration of ETB's fiber network and the contraction in its cash flow generation restrict its ability to improve its EBITDA.

ETB is individually rated as any recurring support from the Bogota District of its controlling shareholder is unlikely. Fitch believes that the District's decision in 2017 to restructure ETB's dividend liability into a 10-year obligation with a two-year grace period is extraordinary support for the company's liquidity, with little likelihood of recurrence in the future.


The key assumptions used by Fitch for the particular case of the issuer include:

--Total revenues grow at a low to mid-single-digit pace over the rating horizon, supported by higher FTTH network penetration;

--Net leverage is expected to peak at 1.1x in 2023 and remain flat thereafter;

--Maximum capital intensity of 38% in 2022 and downward trend towards 22% in the medium term;

--payment of dividends owed to the District of Bogotá;

--Negative FFL during the rating horizon.


Factors that could, individually or collectively, lead to a negative/downgrade rating action:

--Low revenue growth due to lower-than-expected subscriber growth in non-traditional services, while service revenue contraction in copper continues;

--deterioration in the EBITDA margin without a significant improvement in its market share;

--Negative FCF generation with a sustained low cash balance;

--Total debt to EBITDA leverage metrics above 2.0x and/or net debt to EBITDA above 1.5x on a sustained basis.

Factors that could, individually or collectively, lead to a positive rating action/upgrade:

--A positive rating action would require an improvement in the company's operating performance.


Adequate Liquidity Position: On January 18, 2023, ETB announced that it had completed the payment of COP354,000 million of the maturity of its international bonds. This was largely financed through long-term loans signed with Scotiabank Colpatria SA (SBC) in November 2022. The company's FCF is estimated to remain negative over the rating horizon given the burden of higher capex requirements. and the COP411,000 million of dividends to be paid to the District of Bogotá between 2022 and 2027.

As of September 2022, the company's cash on hand was reduced to COP191,000 million from COP460,743 million in 2021, with the short-term debt made up of the aforementioned international bonds and a short-term loan from SBC (both were reimbursed later). ETB reported lines of credit for COP702,000 million available as of September 30, 2022.


ETB is a Colombian integrated telecommunications company 86.36% owned by the District of Bogotá. The main services offered by the company include traditional fixed voice services (local and long distance), broadband (BB) and subscription TV services on its fiber and copper networks.


The aforementioned rating(s) were(were) required and assigned or followed up upon at the request of the issuer(s) or rated entity(ies) (s) or a related third party. Any exceptions will be noted.

This press release is a partial translation of the original issued in English by Fitch on its international website on February 3, 2023 and can be consulted at the link . All opinions expressed are those of Fitch Ratings, Inc.


The main sources of information used in the analysis are those described in the Applied Criteria.


Unless otherwise noted in this section, the highest environmental, social and governance (ESG) credit relevance score is '3'. ESG aspects are credit neutral or have minimal credit impact on the entity, either due to their nature or the way they are managed by the entity.

For more information on ESG Relevance Scores, visit .


--Corporate Finance Rating Methodology (December 29, 2022);

--National Scale Ratings Methodology (December 22, 2020);

--Methodology for Ratings of Government Related Entities (November 12, 2020).


ISSUER or ADMINISTRATOR NAME: Bogota Telecommunications Company, SAESP




COMMITTEE MEMBERS: Martha Rocha (Chair), Natalia O'Byrne Cuéllar, Gilberto González, Rafael Molina, Andrew Bushey

The resumes of the Members of the Technical Committee can be consulted on the website: .

The credit risk rating of Fitch Ratings Colombia SA Sociedad Calificadora de Valores constitutes a professional opinion and at no time does it imply a recommendation to buy, sell or hold a security, nor does it constitute a guarantee of compliance with the obligations of the rated party.

In the cases in which it applies, for the assignment of this rating Fitch Ratings considered the aspects referred to in article 4 of Decree 610 of 2002, in accordance with article 6 of the same Decree, today incorporated in articles 2.2. 2.2.2. and, respectively, of Decree 1068 of 2015.

This document may include information on ratings on an international scale and/or from jurisdictions other than Colombia, this information is public and may be in a language other than Spanish. However, the rating actions adopted by Fitch Ratings Colombia SA Sociedad Calificadora de Valores only correspond to the ratings with the suffix "col", the other ratings are only mentioned for reference.



AAA(col). 'AAA' National Ratings indicate the highest rating assigned by Fitch on that country's national rating scale. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country.

AA(col). 'AA' National Ratings denote expectations of very low default risk relative to other issuers or obligations in the same country. Default risk differs only slightly from that of the country's highest-rated issuers or obligations.

A(col). 'A' National Ratings denote expectations of low default risk relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions may affect the ability to pay timely to a greater degree than would be the case with financial commitments within a higher rating category.

BBB(col). 'BBB' National Ratings indicate a moderate risk of default relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions are more likely to affect the ability to pay timely than in the case of financial commitments that are in a higher rating category.

BB(col). 'BB' National Ratings indicate a high risk of default relative to other issuers or obligations in the same country. Within the country context, payment is to some extent uncertain and the ability to pay timely is more vulnerable to adverse economic changes over time.

B(col). 'B' National Ratings indicate a significantly elevated risk of default relative to other issuers or obligations in the same country. Financial commitments are being met but a limited margin of safety remains and the ability to continue timely payment is conditional on a favorable and stable economic and business environment. In the case of individual obligations, this rating may indicate obligations in trouble or in default with the potential for extremely high recoveries.

CCC(col). The 'CCC' National Ratings indicate that default is a real possibility. The ability to meet financial commitments depends exclusively on favorable and stable economic and business conditions.

CC(col). 'CC' National Ratings indicate that a default of some kind appears likely.

C(col). 'C' National Ratings indicate that an issuer's default is imminent.

RD(col). 'RD' National Ratings indicate that in the opinion of Fitch Ratings the issuer has experienced a “restricted default” or an unremedied default on a bond, loan or other material financial obligation, even though the entity is not subject to review procedures. bankruptcy, administrative, liquidation or other formal dissolution proceedings, and has not otherwise ceased its business activities.

D(col). 'D' National Ratings indicate an issuer or instrument in default.

E(col). Description: Qualification suspended. Obligations that, in the face of repeated requests from the rating agency, do not present adequate information.

Note: "+" or "-" modifiers may be added to a rating to denote relative position within a particular rating category. These suffixes are not added to the 'AAA' category, or to categories lower than 'CCC'.


F1(col). 'F1' National Ratings indicate the strongest ability to pay timely financial commitments relative to other issuers or obligations in the same country. On Fitch's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. When the liquidity profile is particularly strong, a "+" is added to the assigned rating.

F2(col). 'F2' National Ratings indicate a good ability to pay timely financial commitments in relation to other issuers or obligations in the same country. However, the margin of safety is not as large as in the case of the highest ratings.

F3(col). 'F3' National Ratings indicate an adequate capacity for timely payment of financial commitments in relation to other issuers or obligations in the same country. However, this capacity is more susceptible to adverse changes in the short term than the financial commitments in the higher rating categories.

B(col). 'B' National Ratings indicate an uncertain ability to pay timely financial commitments relative to other issuers or obligations in the same country. This capacity is highly susceptible to adverse changes in short-term financial and economic conditions.

C(col). 'C' National Ratings indicate that an issuer's default is imminent.

RD(col). National 'RD' ratings indicate that an entity has defaulted on one or more of its financial commitments, while continuing to meet other financial obligations. This category is only applicable to entity ratings.

D(col). 'D' National Ratings indicate a current or impending payment default.

E(col). Description: Qualification suspended. Obligations that, in the face of repeated requests from the rating agency, do not present adequate information.


PROSPECTS. These indicate the direction in which a rating could possibly move within a period of one to two years. They also reflect trends that have not yet reached the level that would drive the rating change, but could if they continue. These can be: "Positive"; "Stable"; or “Negative”.

Most Outlooks are Generally Stable. Ratings with Positive or Negative Outlooks will not necessarily be modified.

OBSERVATIONS. These indicate that there is a greater probability that a rating will change and the possible direction of such a change. These are designated as “Positive”, indicating a potential upgrade, “Negative”, for a potential downgrade, or “Evolving”, if the rating can be raised, lowered or affirmed.

An Observation is typically event-driven, so it is generally resolved in a short period of time. Such an event may be anticipated or may have occurred, but in both cases the exact rating implications are undetermined. The Observation period is typically used to collect more information and/or use the information for further analysis.


The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process , or provide additional information, beyond the issuer's available public disclosure.



Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

    • Corporate Monitoring & Forecasting Model (COMFORT Model), v8.1.0 ( 1 )



Bogota Telecommunications Company, SA, ESP EU Endorsed, UK Endorsed


All Fitch Ratings (Fitch) credit ratings are subject to certain limitations and provisions. Please read these limitations and stipulations at the following link: . In addition, I define



The ratings above were solicited and assigned or maintained at the request of the rated entity/issuer or a related third party. Any exceptions follow below.


Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.

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