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S&P: Hughes Network view stable
Standard & Poor's said it revised its outlook on Hughes Network Systems LLC to stable from negative and affirmed all its ratings, including the B corporate credit rating.
The outlook change reflects initiation of commercial operations of SpaceWay-3, the company's advanced satellite, the agency said. As Hughes adds customers onto the SpaceWay platform, S&P expects the company will begin reducing its need for leased transponder capacity, which will lower its operating costs and, as a result, EBITDA margins should improve from the current 14% level.
The agency said the ratings on Hughes reflect a highly leveraged financial profile and uncertain long-term growth prospects for the company's consumer and small business broadband service because this service has fewer capabilities than faster cable and telephone data services, which could limit growth as competitors expand their service coverage.
Tempering factors include Hughes' leading position in the very small aperture terminal industry and a degree of revenue stability with sizeable revenue backlog from three-to-five-year contracts with large enterprise customers, S&P added.
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