Fitch Ratings has downgraded Liberty Communications of Puerto Rico LLC's (LCPR) Long-Term Issuer Default Rating (IDR) to 'B' from 'BB-', with a Stable Outlook. Concurrently, LCPR's revolving credit facility, 2028 term loan, and 2027 and 2029 senior secured notes were downgraded to 'B+' with a Recovery Rating of 'RR3' from 'BB+'/'RR2'. This downgrade reflects lower-than-expected revenues and profitability.
The reduced financial performance is attributed to a decline in postpaid mobile subscribers, disruptions stemming from the migration of customers to its mobile network, and lower equipment sales. These factors contributed to higher leverage in 2024 and are expected to slow future deleveraging efforts for the subsidiary. Fitch projects LCPR's net debt/EBITDA ratio to remain elevated, peaking at approximately 10.7x in 2024, before gradually decreasing towards 6.0x by 2026.
Despite the downgrade, Fitch forecasts LCPR's EBITDA to improve to $360-$370 million by 2025, up from $257 million in 2024, as integration and migration costs subside and commercial initiatives take effect. LCPR does not face any significant debt repayment obligations until 2027, providing some liquidity stability. The rating also acknowledges LCPRH's strong market position as a leading telecom in broadband and Pay-TV in Puerto Rico.
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