Report: Iusacell needs fresh capital injection

Mexican mobile operator Iusacell will require a fresh capital injection from shareholders this year to face the US$500mn of debt that comes due in 2004, according to La Reforma newspaper. This week's annual shareholders' meeting did not discuss any possibility of financial restructuring. Ricardo Salinas Pliego, the majority shareholder of Iusacell, is reported to have ruled out any fresh equity for the company. The Salinas group, which controls Iusacell, has not presented any plans for restructuring the debt or talking to creditors, the report said. Shortly after buying Iusacell in mid-2003 Salinas reportedly stated that a long-term financial plan would be prepared, according to Jorge Lagunas, analyst at Mexican broker Interacciones. "It is a company nearly in bankruptcy and it seems to me the only way out is a significant capital injection to be able to do something," Lagunas is quoted as saying. "The first thing that the management has to do is present a strategic business plan for the next three years, but faced with the panorama they have, they do not have the elements to present a viable business proposal." Iusacell's total debt is estimated at US$1bn, and the company generates between US$100mn and US$120mn in sales a year, the report said. Interest payments alone are some US$20mn a quarter. The company had 1.3 million customers at the end of 2003. In February, Iusacell general manager Gustavo Guzmán said the company would invest US$300mn to offer new services.