Moody's downgrades Telephone and Data Systems

Moody's Investors Service said it downgraded Telephone and Data Systems, Inc.'s issuer rating and senior debt to Baa3 from Baa2 and subsidiary United States Cellular Corp.'s senior debt to Baa3 from Baa2. This concludes the review for downgrade, and the outlook is negative.

The agency said the downgrade it based on its view that United States Cellular's operational rebound will take longer than previously expected due to heightened competitive activity and execution mistakes by United States Cellular. Consequently, Moody's expects credit protection measurements at both Telephone and Data Systems and United States Cellular will remain relatively stable over the next two years.

Telephone and Data Systems' Baa3 rating reflects the company's relatively low leverage, ample liquidity and several valuable non-core investments that could be monetized, Moody's said.

Notwithstanding its still solid financial profile, the company's rating is constrained by the intense competitive challenges faced by its primary operating unit, United States Cellular, the agency said.

Moody's said the negative outlook reflects the company's challenge of maintaining leverage consistent with an investment-grade rating in the face of negative forces that include its relatively small scale in the brutally competitive wireless business, secular declines in legacy wireline services, increasing competition and the maturation of the wireless business in the United States.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.