S&P up MetroPCS to positive, rates loan BB-

Standard & Poor's said it revised the outlook on MetroPCS Communications Inc. to positive from stable and affirmed its existing ratings, including the B corporate credit rating.

The agency also assigned subsidiary MetroPCS Wireless Inc.'s proposed amended and extended $800 million term loan B-2 an issue-level rating of BB- with a recovery rating of 1, indicating an expectation of very high (90% to 100%) recovery for lenders in the event of a payment default.

The outlook change reflects the agency's expectation for healthy subscriber growth at MetroPCS, which S&P believes will lead to net free cash flow positive results after capital expenditures in 2010, albeit at modest levels.

S&P said the B rating on MetroPCS reflects what it views as a challenging business model, which targets lower-income customers; a highly competitive environment; and high leverage. The debt-to-EBITDA ratio for the rolling 12 months ended March 31 was 4.8 times.

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