Moody's rates T-Mobile notes Ba3

Moody's Investors Service said it assigned Ba3 (LGD4, 52%) ratings to $11.2 billion of senior notes issued by T-Mobile USA, Inc., $5.6 billion of which are intercompany notes to Deutsche Telekom AG. The company's other ratings and stable outlook are unchanged.

The notes include $1.25 billion 6.464% notes due 2019, $1.25 billion senior reset notes due 2019, $1.25 billion 6.542% notes due 2020, $1.25 billion reset notes due 2020, $1.25 billion 6.633% notes due 2021, $1.25 billion reset notes due 2021, $1.25 billion 6.731% notes due 2022, $1.25 billion reset notes due 2022, $600 million 6.836% notes due 2023 and $600 million reset notes due 2023.

In connection with the business combination of T-Mobile USA and MetroPCS Communications, Inc. completed on April 30, T-Mobile USA issued $11.2 billion of notes to Deutsche Telekom to refinance some intercompany debt between T-Mobile USA and its subsidiaries and Deutsche Telekom and its subsidiaries (other than T-Mobile USA and its subsidiaries).

T-Mobile's Ba3 corporate family rating reflects the agency's expectation for improved execution as a result of enhanced scale, better device lineup (especially the iPhone), accelerated network investment and a new pricing structure for smartphones. In addition, a strong liquidity profile and valuable spectrum assets also provide credit support, Moody's said.

In the agency's view, these strengths are offset by the company's fourth position in the highly competitive U.S. wireless industry, the capital intensity associated with building out its 4G LTE network and meeting rapidly rising bandwidth demand and a moderately leveraged balance sheet.

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