Moody's may downgrade AT&T

Moody's Investors Service said it placed the A2 ratings of AT&T Inc.'s debt under review for possible downgrade following news that the company will acquire T-Mobile USA from Deutsche Telekom in a cash and stock transaction, currently valued at about $39 billion.

Of the purchase price, $25 billion is to be paid in cash and $14 billion in AT&T stock, although the company has the option to upsize the cash portion of the purchase by up to $4.2 billion, Moody's said.

The combination of the No.2 (AT&T) and No.4 (T-Mobile USA) wireless carriers in the United States will create a leading operator, which on a pro forma basis will serve about 130 million subscribers, encompassing about 43% market share, the agency said.

The transaction is expected to be completed in 2012, following an expected close scrutiny by the various regulators and government entities.

As part of the rating action, Moody's also placed the ratings of AT&T's subsidiaries under review for downgrade.

Given AT&T's moderate cash balances, Moody's said it anticipates the company will raise about $20 billion in new debt to help fund the cash portion of the acquisition.

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