SANTIAGO – Chilean telecommunications group Entel on Thursday said its board had approved a 350-billion-peso ($514-million) capital increase.
The equity offering, authorized Wednesday by Entel’s board, still must be approved at an extraordinary shareholders’ meeting scheduled for April, the Santiago-based company said in a filing with Chile’s securities regulator.
It did not indicate how the company would invest the additional capital, although market sources linked the measure to some problems Entel has encountered with its expansion plans in Peru.
A few weeks ago, Moody’s Investors Service downgraded two of Entel’s bonds further into junk territory, from Baa2 to Baa3, pointing to the company’s “shift in credit quality following its expansion into the Peruvian market” following the 2013 acquisition of Nextel Peru, and “stronger competition in both Chilean and Peruvian markets.”
Entel, controlled by the Hurtado family, posted a net loss of 1.1 billion pesos (around $1.62 million at the current exchange rate) in 2015 due to operational weakness and its efforts to consolidate its Peruvian unit.
Its bottom line took a hit even though the company’s revenues climbed 7.6 percent last year to $2.37 billion.
Entel’s subscriber base rose 9 percent in 2015 to 12.8 million: 9.7 million in Chile, down 3 percent from 2014, and 3.1 million in Peru, an increase of 80 percent.